The Reserve Bank of Zimbabwe (RBZ) has recently called for a re-orientation of Micro-finance firms in the country in order to ensure that they focus on supporting marginalised people living in rural areas to promote financial inclusion.
RBZ Deputy Governor, Dr Charity Dhliwayo told micro-finance sector executives at the inaugural Zimbabwe Association of Micro-Finance Institutions (Zamfi) summer school, in the resort town of Nyanga, that the micro-finance institutions (MFIs) are an integral developmental part of the financial sector that have lost their way as they are concentrating on maximising profit hence the need for re-orientation.
“We have since noticed that over time, MFIs have largely drifted from their original intent as profit maximisation has become the main focus. The gradual reduction in donor funding and subsidies over the years has contributed to the current mission drift by MFIs. Some of the MFIs might also not quite understand their core functions” she said while adding that it was also critical that the loans focus more on productive sectors than consumption.
MFI Registrar at the RBZ, Norman Mataruka said RBZ statistics showed that about 89 percent of the institutions were operating in Harare and Bulawayo.
“The people who are supposed to be targeted (by MFIs) in the rural areas do not have access,” he said, adding that traditional banks were reluctant to go outside urban areas and MFIs should take advantage of the gap to spread their tentacles.
Mr Mataruka said it was critical that MFIs improve their corporate governance and management styles to ensure their operations outlived their founders.
“My files are always full of complaints from borrowers,” the RBZ director said, adding that some of the institutions were also charging exorbitant interest rates which made it impossible for borrowers to get out of debt.
According to the Central bank, Zimbabwe had 155 registered MFIs with 417 branches countrywide as at the end of September 2015, with their basic role being to extend small, short term loans to consumers.
ZIMBABWE RESERVE BANK STEPS UP EFFORT FOR FINANCIAL INCLUSION10/12/2015