ZIMBABWE’s microfinance institutions and the government have agreed to amend the current Microfinance Act to extend the licence tenure for money lenders from 12 months to three (3) years.
The Zimbabwe Association of Microfinance Institutions (Zamfi) executive director Godfrey Chitambo told Southern Eye Business that amendments had already been agreed on by all stakeholders, including the Finance ministry and Reserve Bank of Zimbabwe .
“The most urgent requirement is adoption of amendments to the current Microfinance Act. Among these amendments, is the contentious issue of the one-year Microfinance Institution (MFI) licence tenure which needs to be revised to at least three years,” Chitambo said.
He said renewing a licence was cumbersome as it required a lot of paperwork and payment of at least $150. As at September 30 2014 the sector’s total loans amounted to $151,8 million down from $164,2 million as at December 31 2013.
The microfinance sector comprises 147 credit only MFIs and one deposit-taking microfinance institution that was recently licensed by the regulatory authority. The MFIs have branches totalling 473 countrywide, offering credit facilities to individuals and corporates.
Chitambo said the sector required huge and massive injection of capital even in the form of foreign direct investment and in the long term, their plan was to secure funding for their sector from various development partners, including the fiscus.
“In addition, we look forward to making our modest contributions to the financial inclusion agenda in this country whereby every citizen has formal access to financial services at affordable and reasonable costs,” he said.
He said major challenges plaguing the sector were around issues of unskilled labour force, poor loan quality, undercapitalisation, weak outreach and high concentration of lending towards civil servants. He, however, said challenges were being addressed gradually by Zamfi through a massive capacity building programme.
Chitambo added that huge opportunities for offering loans existed as banks continued to shy away from the so-called “unbanked risky customers”.
In 2013 the government gazetted a new Microfinance Act, which provided for regulation and supervision of credit only and deposit-taking MFIs because of concerns clients were being prejudiced by deposittaking institutions, some of which have been closed.