Rumbidzayi Zinyuke Manicaland Bureau
Micro Finance Institutions (MFI) under the Zimbabwe Microfinance Fund (ZMF) have partnered with the Food and Agriculture Organisation to finance horticulture production in Manicaland, as the sector seeks to increase micro-lending towards the productive sector in line with Government’s National Financial Inclusion Strategy.
In an interview on the sidelines of the Zimbabwe Association of Microfinance Institutions (ZAMFI) winter school held in Nyanga recently, ZMF managing director Mr Brain Zimunhu said microfinance institutions had of late been increasing the funding channelled towards production, unlike in the past where micro-loans were mostly consumptive.
“In Manicaland there has been a lot of productive lending going on. In addition to our traditional microfinance fund, we also have the Livelihood Food and Security Programme (LSFP) driven by FAO which has targeted horticulture value chains in Makoni and Mutasa, Mutare rural and Nyanga districts. A lot of money from that fund has been channelled towards productive lending,” he said.
He said the programme targeted projects such as paprika, bananas, beans and potato farming as well as pen fattening.
Mr Zimunhu said so far, more than $2 million has been absorbed in paprika production while another $500 000 had gone into sugar bean production.
He said other smaller value chains in the province had also received funding under the programme.
“Manicaland has very good soils and the weather good for horticulture. Much of the agriculture portfolio that we have been managed through the collaboration with FAO has been channelled towards Manicaland.”
The Reserve Bank of Zimbabwe has been encouraging the Microfinance sector to increase lending towards the productive sector as a way of growing financial inclusion within the marginalised communities who are not catered for by big banks.
Mr Zimunhu said while the sector had been trying to move towards that direction, it had however been dogged by challenges that included non-repayment of loans by its clients as well as lack of access to cheap finance, a development which has seen the sector charging exorbitant interest rates on their loans.
He said there was need to prime entrepreneurs so that they could become credit-ready and learn the importance of repaying loans.
“As much as the MFIs want to finance the youth in the informal sector, they think the youth are not yet credit-ready. They need to be taken through an entrepreneurship programme which will make them ready to take loans and repay them properly.
“Going forward there should be mechanism put in place to ensure that youths are still able to borrow even without collateral,” said Mr Zimunhu.
He said the RBZ’s guarantor scheme where the loans by the youths could be guaranteed by a third party to avoid the need for collateral, would help both the sector and the youths.
There are almost 190 Microfinance Institutions in Zimbabwe and the sector is likely to continue growing as it has been co-opted into Government’s development agenda towards greater financial inclusion.