MICROCAPITAL BRIEF: Tightened Regulation in Zimbabwe Makes Directors, Officers, Shareholders Personally Liable to Microfinance Institution Depositors in Case of Negligence

A new law in Zimbabwe tightens the requirements for microfinance institutions (MFIs) in the country. Each of Zimbabwe’s 205 MFIs will have to pay a yearly fee to maintain its registration with the government. The law also provides for the creation of a Microfinance Advisory Council (MAC), which will report to Minister of Finance and Economic Development on strategic and governance issues. The council membership will include government officials as well as representatives of the banking industry, the microfinance industry and “a reputable consumer body.”

The law further dictates that the leaders of any MFI that fails after having been managed “negligently, fraudulently without regards for the requirements provided for in this act” shall personally be liable to the organization’s retail depositors and institutional lenders. Those liable include the MFI’s directors and principal officers as well as shareholders, if those shareholders were “knowingly a party to the carrying on of the business of the institution in that manner…”.

Sources and Additional Resources

The Standard article
https://www.thestandard.co.zw/2019/11/24/mnangagwa-signs-new-mfis-law/

Ministry of Finance and Economic Development of Zimbabwe
http://zimtreasury.gov.zw/

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