Latest data from the Reserve Bank of Zimbabwe (RBZ) shows that the microfinance industry cumulative retained earnings rose 127.68% to ZWL$1.22 billion for nine months ended 30 September 2021 despite the effects of Covid-19 pandemic.
In the same period last year, MFIs net profit stood at ZWL$536.50 million.
“The industry’s cost containment measures, in particular adoption of digital financial services, and increased operating income underpinned by loan portfolio growth, contributed to growth in aggregate retained earnings,” stated RBZ.
As a result, the sector’s average operational self-sufficiency (OSS) ratio improved from 104.35% as at 30 September 2020, to 171.69% for the period ended 30 September 2021, against the international benchmark of 100%.
RBZ noted that loans advanced by MFIs surged by 47.86% over the quarter, from $3.97 billion as at 30 June 2021 to $5.87 billion as at 30 September 2021. Previously lending has been lagging owing to slow business activity. However, things have changed thanks to the economy reopening.
“The growth was driven by increased demand for loans by small to medium enterprises (MSMEs) to resuscitate their business following government’s relaxation of Covid-19 induced movement restrictions, and low-income households seeking to supplement their disposable incomes to fight the negative effects of the Covid-19 pandemic.”
But, asset quality depreciated as reflected by the portfolio-at-risk ratio of 11.55%, compared to 8.57% reported as at 30 June 2021, against the international benchmark of 5%.
Aggregate capitalization for the microfinance industry increased to ZWL$4.00 billion as at 30 September 2021, from ZWL$3.33 billion as at 30 June 2021, reflecting a 20.04% growth.
“The increase was due to organic growth and additional capital injection at some of the microfinance institutions,” RBZ said.
The sector’s aggregate deposits increased by 57.69% from $442.98 million as at 30 June 2021 to $698.55 million as at 30 September 2021, with one deposit taking microfinance institution (DTMFI) accounting for 68.13% of the sector’s total deposits.
“However, the general level of deposits remains low, and that continues to negatively impact on DTMFIs’ business sustainability.”
According to the central bank, the microfinance sector had 176 registered microfinance institutions as at 30 September 2021, comprising 168 credit-only microfinance institutions and 8 DTMFIs down from 184 in the previous quarter.
“The number of licensed credit-only microfinance institutions declined to 168 as at 30 September 2021 from 176 in the previous quarter, following cessation of operations by some institutions due to the negative effects of the Covid-19 pandemic,” it said.
The industry recorded an increase in the number of women accessing loans during the quarter, from 117,275 to 149, 026. The value of loans to female borrowers also increased by 48.24% during the quarter under review to $2.47 billion up from $1.66 billion – Harare