The Reserve Bank of Zimbabwe (RBZ) said on Saturday it had placed money lender, Lion Microfinance under curatorship for three months due to undercapitalisation and weak management.
Microfinance institutions (MFIs) operating in Zimbabwe are required to meet a minimum capital requirement of RTGS $5 million.
In a notice, the RBZ said Lion microfinance had been placed under the curatorship of the Deposit Protection Corporation.
“Notice is hereby given that Lion Microfinance Limited has today been placed under the management of a curator, for a period of three months in terms of the Microfinance Act (Chapter 24:29),” the Central Bank said.
“This follows a determination that the institution is not in a sound financial condition mainly due to critical undercapitalisation and weak corporate governance.”
Zimbabwe’s microfinance sector has continued to register a strong performance as commercial banks are seen by many as too restrictive and not pro-poor in terms of lending.
According to statistics, local micro-financiers increased lending to various sectors of the economy by 9 percent to RTGS$225,8 million in the first quarter of 2019 compared to the same period last year.
A total of 205 microfinance institutions were operational in Zimbabwe as at December 31, 2018, with six of them being deposit-taking MFIs. – New Ziana.