Friday, 2 December 2016

Guest blog | Zimbabwean micro-entrepreneurs face additional challenges

Lendwithcare lenders have supported so far over 1,200 Zimbabwean micro-entrepreneurs through our partner Thrive Microfinance. Henry Bartram, Managing Director, explains how Lendwithcare loans are still making the difference for entrepreneurs despite the country’s difficult economic situation. He also shares his concerns with us about the deteriorating situation in Zimbabwe and its impact on the micro-entrepreneurs.

Zimbabwe is undergoing a severe economic recession at the moment. This is characterised by an extreme liquidity crisis – long bank queues are the norm as people wait for hours or all day to get money out of the banks. In most cases, the amount they can withdraw is limited to $50 regardless of their actual bank balance. As a result, business confidence in general is low and economic activity has reduced.

In addition, restrictions on imported goods and increased import levies have hit a number of Lendwithcare borrowers whose principal business activity is cross-border trading.

These developments have impacted upon Thrive in a number of ways.

Firstly, many of our borrowers are finding it hard to make repayments on time. We have been able to make provisions for this in repayment schedules and these are within normal accepted limits.

Secondly, it is getting harder to make foreign payments. The country is very short of hard currency however, which does lead to delays in making payments overseas. However, all of Thrive’s loan agreements are registered with the Reserve Bank which gives them priority status.

Thrive itself is doing well. We are growing, profitable and well supported. All profits are retained within the business in order to fund growth. Furthermore, we have a number of long-term backers and operate well within our credit facilities.

Inevitably, there has been some worsening of our default ratios and news about the situation in Zimbabwe is beginning to circulate internationally. We are heartened however, by the resilience of our borrowers. They have seen worse times and know how to get by. They are also, to a remarkable degree, committed to supporting their families and businesses and determined to maintain good relations with the organisations that support them.

Many thanks for your support for our borrowers. Please keep this support coming.

Henry Bartram
Managing Director, Thrive Microfinance

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