The Zimbabwe Association of Microfinance Institutions (ZAMFI) today used the occasion of their 3rd Annual Microfinance Sector Winter School in Kariba, to launch a regulatory review of their sector. The Winter School is taking place from 18 and 20 May under the theme “Tranversing the microfinance landscape”.
The regulatory review which was carried out by banking and finance expert Mr Omen Muza, is comprised of a desk study and a survey of the association’s members, and other key stakeholders including regulatory authorities.
The study was commissioned in line with resolutions of a sector review meeting convened for members by ZAMFI on 6 May 2015, to examine all policy, regulatory developments with an impact on their sector in recent years.
Commenting on the development, the ZAMFI CEO, Mr. Godfrey Chitambo said, “through consultation, our members prioritised a sector review as the most important service which we could provide them with.”
He also explained that the research helped to meet the association’s objective of generating evidence for advocacy on the microfinance sector.
Says Chitambo, “We have been using the research findings to inform ongoing dialogue with regulatory authorities, among other stakeholders, on specific strategies and policies to grow the microfinance sector.”
He said that the analysis was needed to track developments on a sector which was evolving rapidly in sync with demand for funding by the informal sector, which has grown in prominence in line with structural changes in Zimbabwe’s economy.
“In the current economic environment, MFIs are growing in importance as a source of capital for ordinary Zimbabweans, as they often have more flexible conditions for individuals and small businesses seeking to acquire loans,” he said.
Amongst the study’s numerous recommendations, ZAMFI members prioritised the issue of increased tenure of licence for MFIs. According to the report, “the annual licence renewal is of great concern to most microfinance institutions because it promotes a culture of short-termism under which MFIs can only borrow for tenures of up to a year. This means they could in turn only lend on the short end as well, which is suitable for consumptive lending instead of the more sustainable productive lending.”
Two-thirds of MFIs surveyed in ZAMFI’s research prefer a perpetual licence while half want it to be extended by a specific number of years ranging from 2 to 10, with 3 years and 5 years being the most popular.
ZAMFI currently has about 80% of all MFIs operating in the country in its membership. As the umbrella body of microfinance businesses in Zimbabwe, it advocates for an enabling regulatory and funding environment for them, and carries out various programmes to promote best practices among them.
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