THE Reserve Bank of Zimbabwe (RBZ) has incorporated micro-finance institutions as data providers under its Credit Registry database to strengthen national credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending.
The Credit Registry went live in 2017 as part of efforts to bridge Zimbabwe’s ease of doing business deficiencies relating to getting credit.
The intervention is part of doing business reforms to improve the country’s attractiveness to foreign and domestic investment, reducing the cost of doing business, improving the performance of public utilities in delivering quality service, as well as creating value for money.
In his 2023 Monetary Policy Statement issued last week, RBZ Governor, Dr John Mangudya, said the incorporation of MFIs under the Credit registry was with effect from 01 January 2023, under Phase two.
“This initiative is expected to enrich and broaden the scope of credit registry database for the benefit of subscribers,” he said.
Given the sustained availability and growth of the credit data both at the Credit Registry and the three private credit bureaus – XDS ZIM, FINCHECK, and FCB, the Governor said the model continues to play a critical role in enhancing smooth management of credit risk in the financial sector.
According to RBZ, the four credit reporting institutions had as of 31 December 2022, collectively held over 20 million searchable records having received more than 1,6 million inquiries.
During the period under review, Dr. Mangudya said male borrowers constituted 68,4 percent while female borrowers constituted 31,6 percent of loan contracts in the Credit Registry.
Following the successful launch of the Collateral Registry in November last year, Dr Mangudya said banking institutions and some microfinance institutions have since created their profiles in readiness to register movable security supporting borrowings.
The sector has also commenced instituting the necessary adjustments to internal policies and procedures to align with the requirements of the Collateral Registry system.
“Starting in the first quarter of 2023, the Bank has scheduled further outreach and awareness programs for MFIs, MSMEs, and other stakeholders who were not covered in the initial phase,” said Dr. Mangudya.
The RBZ has also established a Collateral Registry for movable assets in order to expand the range of qualifying collateral accepted by lenders as part of the broader reforms to promote access to finance and enhance financial inclusion.
The move is expected to benefit MSMEs as well as the household sectors and ultimately boost production.
SMEs face difficulties in accessing funding as financial institutions demand collateral in the form of immovable property like houses.
The banking sector has been accused of imposing stringent conditions for businesses that need funding.