BY FIDELITY MHLANGA
President Emmerson Mnangagwa has signed into law the Microfinance Institutions (Amendment) Act, which seeks to tighten regulations for micro finance institutions (MFIs).
Some of the key changes include the creation of the Microfinance Advisory Council (MAC) to be headed by a ‘registrar’ whose office shall be the secretariat.
The MAC will advise the Finance minister on strategies and policies to develop the microfinance business and promote good corporate governance among microfinance institutions.
MAC will have members nominated from the Finance and Small and Medium Enterprises ministries, Insurance and Pensions Commission, Securities and Exchange Commission of Zimbabwe, and the Deposit Protection Corporation.
The new law will allow for recognised associations from banking institutions and MFIs as well as a reputable consumer body, which will each have a member on the council.
MFIs will also now pay annual registration fees. They will also be required to apply to renew their registration at least three months before the registration expires.
Directors of MFIs will also be held liable if the company collapses, the law says.
“Where a MFI has been placed under curatorship or judicial management or has been wound up and it is established that the business of the institution or company has been carried or negligently, fraudulently without regards for the requirements provided for in this act ,every person who was a director or principal officer of the institution when its business was being carried on in that manner and every shareholder, who was knowingly a party to the carrying on of the business of the institution in that manner shall be jointly and severally liable with the institution for any loss or damage suffered by creditors including depositors of the institution,” reads part of the law.
Zimbabwe had 205 MFIs as of December 31, 2018.