The government of Zimbabwe recently liberalized its Microfinance Act with provisions such as extending the validity of microfinance institution (MFI) license renewals from one to three years. Zimbabwe’s Finance Minister, Patrick Chinamasa, was quoted as saying financial institution “charges are just too high. With MFIs, it mostly has to do with the fact that investment in the sector is just too low, so companies just end up passing their costs to clients…. Zimbabwe seeks to unlock economic opportunities, especially for the women and youths by expanding access to savings, credit, insurance, capital markets and payment systems.”
The sector’s portfolio at risk ratio for 2015 was 10.7 percent, significantly above the commonly cited target maximum of 5 percent.
The two MFIs in Zimbabwe that report 2015 data to the US-based nonprofit Microfinance Information Exchange (MIX) have an aggregate gross loan portfolio of USD 1.9 million outstanding to a total of 6,000 borrowers.
Mr Chinamasa’s blunt remarks included the statement that “In my constituency, I know the people who need loans, but somehow they never get credit. MFIs grant their monies to crooks who know how to write business plans.”
Sources and Additional Resources
Reprieve for Microfinance Institutions
Ministry for Finance and Economic Development
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