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THE Reserve Bank of Zimbabwe has registered 11 more microfinance institutions (MFIs) during the first half of this year.

Eight of the new MFIs are based in Harare, while the balance are distributed between Mutare, Shurugwi and Marondera.

According to the Registrar of Micro-financiers in the RBZ, the new micro-lenders include Reach Sky Loans (Pvt) Ltd, Mount Camel Investments (Pvt) Ltd, Cushion Me (Pvt) Ltd, North King Investments (Pvt) Ltd, Statacord Investments (Pvt) Ltd, Flow Trade (Pvt) Ltd, Lamcent (Pvt) Ltd, One Four Nine Financial Services (Pvt) Ltd, Cashconnect Finance (Pvt) Ltd, Lic Finance (Pvt) Ltd and Njere MicroFinance (Pvt) Ltd.

The overall increase in the number of MFIs in the first half come on the back of four MFIs, which shut shop during the first quarter of the year after failing to meet the central bank’s compliance requirements. As at March 31, 2015 the number of registered MFIs stood at 143, down from 147 at the beginning of the year.

Observers say MFIs play a critical role in the broader economic recovery agenda insofar as they finance smaller business, which are typically shunned by the larger commercial banks due to perceived high default risk.

But a large number of MFIs succumbed to the pressures of capital erosion, resulting in a massive drop in registered numbers from about 1,700 MFIs in 2003, to less than 70 at the start of 2009.

And experts in the area say effectively functioning MFIs have the potential to boost economic performance, albeit from the small-to-medium enterprises base.

“Zimbabwe’s economic recovery will speed up when there is significant employment creation, increased disposable income and productivity in the country.

“MFIs have not been able to serve their clients for many months, whereas with very small loans they could have very big impact, because their traditional target group includes MSEs and the poor,” says Zimbabwe MicroFinance Wholesale Facility (Pvt) Ltd fund manager Brian Zimunhu.

There is need for broad-based strategies to enhance the lending operations of local MFIs, with the central bank stating that the growth of the sector continues to be hampered by funding challenges largely attributed to the limited availability of affordable long term finance.

Although the growth of the MFIs sector has been sluggish, its loans performance has been fairly reasonable.

According to the RBZ’s MFIs first quarter report, the sector recorded an increase in total loans from $156,99 million as at 31 December 2014 to $163,51 million as at 31 March 2015. — BH24.