• Operating microfinances declined to 184 from 199
  • Industry’s aggregated capitalisation increased by 25.89%
  • Total loans grew to ZW$3.97 billion
  • Aggregated retained earnings surged by 177.66%

The microfinance industry recorded a decline in the number of operating microfinance institutions to 184 as of 30 June 2021 from 199 as of 31 March 2021 owing to the impact of COVID-19 pandemic induced lockdowns.

Zimbabwe has been operating under COVID-19 induced lockdowns since last year in March after the pandemic had become a global emergency as it posed a threat to human lives.

The COVID-19 lockdown had negative impacts on the global economy resulting in most economic industries suffering from the negative effect and Zimbabwe was not spared from it.

“During the quarter ended 30 June 2021, the sector had 184 registered microfinance institutions comprising 176 credit-only microfinance institutions and 8 deposit-taking microfinance institutions (DTMFIs).

“The number of licensed credit-only microfinance institutions decreased to 176 as at 30 June 2021 from 191 in the previous quarter, as Covid-19 impact continues to weigh on the operations of institutions in the sector,” read the microfinance quarterly report.

The 15 closed micro finances add to another 31 which according to Reserve Bank of Zimbabwe Governor, John Mangudya ceased operations in 2020 due to viability challenges arising from constrained funding and low business volumes compounded by the COVID-19 pandemic.

However, the industry’s aggregate capitalisation for the quarter increased by 25.89% to ZW$3.33 billion from ZW$2.64 billion as of 31 March 2021, largely driven by organic growth and fresh capital injection at some of the microfinance institutions.

Aggregated retained earnings for the six months ended 30 June 2021 surged by 177.66% to ZW$1.03 billion.

“The increase was largely attributed to cost-containment measures adopted by some of the microfinance institutions as evidenced by the improvement in the average operational self-sufficiency (OSS) ratio from 142% to 187.22% over the same period,” read the report.

The sector’s total loans continued on a growth trajectory as evidenced by a 27.99% increase to ZW$3.97 billion from ZW$3.10 billion as of 31 March 2021 buoyed by the increased demand for loans by low-income households seeking to supplement their disposable incomes and cushion themselves against the effects of the Covid-19 pandemic.

During the period under review asset quality improved as reflected by the portfolio at-risk (>30 days) (PaR) ratio of 8.57%, compared to 10.63% against the international benchmark of 5%.

Total deposits in the Deposit-taking microfinance sub-sector increased by 26.56%, to ZW$442.98 million from ZW$350.02 million with two institutions accounting for the bulk of the deposits. The level of deposits, however, remains low and this, in turn, continues to hamper the sustainability of DTMFIs business.

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