Business Reporter — The Herald
The Reserve Bank of Zimbabwe has issued Success Microfinance Bank, formerly Collarhedge Finance, with a deposit taking licence, as it presses on with efforts to expand financial services to cover the poor and business start ups.“It is hereby notified that Success Microfinance Bank Ltd has been licenced and authorised to conduct deposit-taking micro-finance business . . . with effect from December 2, 2016,” the RBZ said in a statement.
“The Reserve Bank has also approved the name change from Collarhedge Finance Ltd to Success Microfinance Bank Ltd.”
Success Microfinance Bank Ltd deposit-taking licence comes at a time when the financial services industry is facing a crippling cash crunch, with banks cutting back on lending and limiting withdrawals to as low as $100 per day.
The business of lending to the poor and small businesses, including offering opportunities for savings, as performed by over 160 microfinance institutions in Zimbabwe, is becoming increasingly important in view of the informalisation of the economy; now consisting of millions of people in individual enterprise.
According to a 2014 Finscope survey, an estimated 70 percent of Zimbabweans are unbanked. However, the MFI sector continues to grow.
In the year to September 2015, total loans advanced by MFIs climbed 14 percent to $173 million, according to RBZ figures.
Central bank chief, Dr John Mangudya has in the past welcomed the growth in this sector, as it dovetails with the apex bank’s plan of deepening financial markets at a time the mainstream banking sector is facing stunted growth.
The central banks targets to increase the level of formal financial services in the country to 90 percent by 2020 from 69 percent.
The strategy also seeks to improve the number of financially included small businesses to 80 percent by 2020.
The RBZ has the backing of Finance and Economic Development Minister, Patrick Chinamasa.
According to the 2016 Mid-term Fiscal Policy statement, Government intends to boost the MFI sector by establishing a bank called Empower Bank.
“The modalities for the establishment of the proposed Empower Bank including capitalisation, are being developed in consultation with all relevant authorities, including monetary authorities.