The number of registered microfinance institutions (MFIs) in Zimbabwe rose to 196 during the third quarter ended 30 September 2022 from 176 in the comparative period against a background of unstable trends, latest data shows.
As a result of an unfavorable macroeconomic climate, low levels of capital, general liquidity issues that affected both MFIs and their consumers, as well as the high cost of financing in the market, the MFIs’ ability to operate is seriously threatened.
The Reserve Bank of Zimbabwe (RBZ) Q3 2022 MFI report shows that the microfinance industry has maintained a positive growth trajectory.
The total amount of retained earnings for the nine months that concluded on September 30, 2022, was $9.70 billion, an increase of 695.25% over the same period the previous year.
“The increase was attributable to the growth in interest income underpinned by growth in loan portfolio,” said RBZ.
MFIs’ operational self-sufficiency ratio was at 210.18%, compared to 202.50% for the previous quarter against the international benchmark of 100%, demonstrating the sector’s self-sustainability.
The industry recorded an increase of 725.69% in net profit to $9.70 billion from $1.18 billion during the quarter ended 30 September 2021.
“The increase was generally driven by interest income, revaluation reserves and application of cost containment measures.”
RBZ added that: “The microfinance industry registered an improvement in its performance during the review period underpinned by the general economic recovery on the back of macroeconomic stabilization measures,” said RBZ.
There were 196 registered microfinance institutions as of 30 September 2022, including 188 credit-only organizations and 8 deposit-taking institutions (DTMFIs). In the same period last year, there were 176 registered MFIs.
Between December 2021 and September 2022, 34 credit-only microfinance organizations received licenses.
The industry’s total loan portfolio increased by 100.63% over the review period, from $15.86 billion to $31.82 billion, continuing its increasing trend. The PaR (>30 days) ratio decreased from 10.39% to 9.99% during the course of the quarter, indicating a slight improvement in portfolio quality relative to the 5% worldwide benchmark.
With a total loan book of $25.95 billion (81.58%) of the entire sector loan portfolio of $31.81 billion, the top 20 microfinance institutions are still in control of the market, down from 85.41% in the previous quarter – Harare