Charity Ruzvidzo Business Reporter
THE performance of microfinance institutions remains subdued due to inadequate funding with consumption lending dominating issuance of loans at the expense of productive sector funding, Reserve Bank of Zimbabwe Governor John Mangudya has said.According to the apex bank, the sector’s total loans amounted to $151.8 million as at September 30, 2014 down from $164.2 million as at December 31, 2013.
“The microfinance sector’s aggregate loan portfolio remains skewed towards consumption at the expense of productive sector funding. Consumption lending, which largely comprises salary based loans constituted 54.2 percent of total loans as at September 30, 2014,” said Mangudya last Wednesday.
“The microfinance institutions’ performance as measured by aggregate lending has largely remained subdued due to inadequate funding. The sector’s total loans amounted to $151.8 million as at September 30, 2014 down from $164.2 million as at December 31 2013.”
Mangudya said the Reserve Bank has been working with the sector’s key stakeholders to promote productive lending.
“The efforts have started bearing positive fruits as witnessed by the increase in the proportion of productive lending from 29.1 percent as at December 31 2013 to 45.6 percent of total loans as at September 30 2014.
“The Reserve Bank is working with microfinance stakeholders towards the establishment of capacity building programmes tailored for the microfinance industry,” he added.
He said efforts by MFIs to reach out to remote and outlying areas that have not been adequately served by banking institutions as part of broader financial inclusion initiatives, remains commendable.
There were 482 MFI branches serving 220,357 clients with 252,565 loan accounts throughout the country as at September, 30, 2014.
The Reserve Bank boss said increased use of mobile financial services has significantly improved the availability of financial products to the previously unbanked segments of society.