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The four deposit taking micro-finance institutions (DTMFI) that the Reserve Bank of Zimbabwe licensed have in the past year seen a jump in both the number of new account openings and deposits, latest figures from the central bank show.

DTMFIs, also referred to as micro-finance banks, were registered as the central bank sought to encourage financial inclusion through the MFIs sector which has a far wider reach than conventional banks.

The licensed institutions are African Century Limited, Getbucks Financial Services, Success Microfinance Bank and Lion Microfinance Limited. The first DTMFI was licensed in 2015. According to the RBZ, the microfinance banks saw new account openings surge around 68 percent to 2 848 between September 2016 and 2017 while deposits amounted to $5,7 million, up from $2,10 million.

“The four operational DTMFIs had a market share of 25,32 percent of the total microfinance sector loans as at September 2017,” the central bank said. Total microfinance sector loans amounted to $238 million during the period. Of the four deposit taking microfinance institutions, only one posted a loss during the period, with the central bank attributing it to “absorption of start up costs.”

Referred to in some countries as “banks for the poor”, DTMFIs are popular for their support of small scale businesses and are flourishing in countries such as Nigeria.

Besides being less restrictive when it comes to bank account openings, the microfinance banks also offer interest on deposits that is competitive, at times significantly higher than that which traditional banks offer. In Zimbabwe traditional banks have been criticized for failing to promote a culture of depositing cash due to the low interests that they offer. — New Ziana.