Microfinance institutions (MFIs) across the country are cashing in on the proverbial “January disease” as parents battle to raise funds to pay schools fees as well as cover other pressing domestic needs.
A survey by New Ziana on Wednesday found that the financial institutions, well known for their user friendly access terms but high interest rates, were struggling to meet demand for loans.
As the merry making and festive season came to an end and the reality of pressing financial needs in January struck, many people, the majority civil servants, have seen MFIs as their financial redeemers as accessing loans from banks was not easy.
At the end of last year, Zimbabwe had a total of 116 registered MFIs although hundreds more operating are known to operate illegally and are reputed for their crude tactics to recover loans.
Officials from the MFIs told New Ziana demand for loans was exceedingly high this month, with school fees topping the list for most people.
A Yambukai Finance official Peter Musara said the firm was on average serving around 50 clients per day since the beginning of the year.
“There is a lot of pressure and demand for loans is very high,” he said.
Musara said the institution was extending minimum loans of $100 and maximum of $2 000 with the repayment period stretching up to six months.
An official at Masvingo-based Hillthru Enterprises who requested anonymity said the MFI, which has 18 branches across the country, was failing to meet demand for loans at some of its outlets.
“As of December last year, demand was very high as a result of the bonus which did not come through,” he said.
“And with the opening of schools in January, demand is very high such that in some of our branches, they are failing to match the demand.”
The official however said some of the clients were being left stranded as they failed to meet the basic requirements to access the loans.
Failure by the government as well as some companies to pay salaries on time over the past few months and especially last December made the situation worse for most workers.
“Some people are already over borrowed and could not get new loans in January,” said another money lender.
Experts in the micro-finance sector say, the institutions target civil servants as they are far easier to deal with when it comes to loan recoveries than dealing with private and those in the informal sector.
The school fees headache remains one of the long standing challenges that most parents are dealing with as access to finances presents a nightmare given liquidity constraints in the economy.
While the government has said no student must be turned away for failing to pay schools fees, some schools have heeded the call while others are demanding that at least a portion be paid before children are admitted in school. — New Ziana