Zimbabwe: MFI lending rises despite tight liquidity environment

Aug 24, 2015

Microfinance institutions' lending slightly increased during Q1.

Microfinance Institutions' (MFIs') lending slightly increased during the first three months of the year despite the tight liquidity environment, according to the Reserve Bank of Zimbabwe (RBZ).

"The increase is largely attributable to increased lending to existing customers with less focus on new clients by the microfinance institutions as a way of managing delinquency levels in their portfolios," said RBZ governor John Mangudya in a monetary policy statement seen by the Financial Gazette.

The central bank chief also noted there had been a notable improvement in the level of compliance by MFIs with regulatory requirements, including compliance with capital requirements and submission of statutory returns.

However, he added that growth of the microfinance sector continues to be constrained by funding challenges on the back of general market illiquidity and high cost of funding.

Total loans increased by 4,1 per cent from $157 million (€139 million) in December 31st, 2014 to $163.5 million in March 31st, 2015.

These results contrast to the eight per cent decline in loans granted by the sector during the first nine months of 2014.ADNFCR-2976-ID-801798430-ADNFCR