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FREQUENTLY ASKED QUESTIONS

WHO OWNS ZMF?

ZMF is owned by a Trust, which in turn acts as the holding entity for the operating company, which is registered as a private limited company. Both the Trust and the Company have been established in and under the laws of Zimbabwe. No individual or organization owns ZMF. Members of the Board of Trustees and Board of Directors are selected on the basis of their knowledge and expertise, relevant to the purpose and objectives of ZMF, but they do not represent the interests of any constituencies.

WHAT ARE THE PURPOSE AND OBJECTIVES OF ZMF?

ZMF was established as a legal entity, with the explicit purpose of carrying out the objective of contributing to sustainable and equitable economic development in Zimbabwe, through a strengthened and recapitalized microfinance sector, wherein the beneficiaries will be: Zimbabwe microfinance institutions, duly registered in accordance with the laws of Zimbabwe; Banks and building societies, duly registered in accordance with the laws of Zimbabwe; Microfinance banks, duly registered in accordance with the laws of Zimbabwe; Value Chain Actors and Savings and credit union cooperatives.

FROM WHERE DOES ZMF'S MONEY COME?

Four donors – Hivos, GIZ (DED), DANIDA and DFID – have provided the start-up capital to ZMF. Other donors, social investors, and philanthropic agencies – local and international – are invited to provide additional capital to ZMF to fund its growth and sustainability. The intention is for ZMF to be a revolving fund that is sustainable in its own right.

WHAT KINDS OF PRODUCTS AND SERVICES DOES ZMF OFFER?

ZMF mainly provides loans, tailored to the specific risks and circumstances of each qualifying organization. On a very limited basis, ZMF will use a small pool of grants to partially defray the costs of capacity building services for targeted intermediaries.

DOES ZMF GIVE OUT GRANTS?

No. ZMF sets aside a very small pool of money, which, at the discretion of the Credit and Risk Committee, can be used to offset some or all of the costs of short-term, highly targeted, and very specific technical assistance that is deemed necessary and capable of fixing a problem that may directly impact the viability of the loan being considered by ZMF. In nearly all cases, these funds would be disbursed, on a performance basis, to the organization(s) providing the assistance.

WHAT ARE THE ELIGIBILITY CRITERIA TO QUALIFY FOR A LOAN?

Any organization applying to ZMF must meet ALL of the following seven criteria:

  1. Registered MFI
  2. Possession of a valid operating license
  3. Management capacity: The Chief Executive Officer and senior management should have minimum of a diploma in a relevant discipline and have a minimum of at least 5 years of relevant experience in a lending institution
  4. Board of Directors comprising members with diverse skills (including finance, legal, business, banking among others) professional expertise and experience and should have at least a diploma in their area of experience
  5. 2 years of financial statements reviewed and verified by a recognised auditing firm
  6. Institutional structure: The institution's structure should be in full compliance with the minimum requirements of the regulator on key functions
  7. FSP to produce a valid Business Plan that management uses to guide their operations, and includes a clear vision, mission, strategy and operational plan to target the economically active poor.

They must also meet at least 5 of the following 9 criteria:

  1. At least 20% of most recently active borrowers are women
  2. 25% of first microenterprise loans over the most recent 6 months are $300 or less
  3. MFI to have a minimum of 500 active loan clients
  4. At least 30% of these loans should be micro-enterprise loans
  5. Average disbursed loan size below $1,000 over the most recent 6 months
  6. Portfolio at risk 30days ≤ 10%
  7. Average of less than 10% write-off annually over past 2 years
  8. Positive net operating income, excluding grants over the past 2 years
  9. Operational Self Sufficiency (OSS) is no less than 70% for the most recent fiscal year-end

If my organisation meets the eligibility criteria, will it automatically get a loan from ZMF?

No. The eligibility criteria only provide an initial screening of applicants. The decision about whether or not an applying organization receives a loan is subject to a detailed institutional review and due diligence, which, in turn, is reviewed by the Credit and Risk Committee of ZMF, in which the final decision to lend, or not, resides.

WHAT KINDS OF INTEREST RATES DOES ZMF CHARGE?

ZMF charges market-related interest rates, which reflect its own cost of funds, a margin for inflation and reasonable operating costs of ZMF, and the risks specific to each transaction.

WHAT IS ZMF'S DEFINITION OF A MICROENTERPRISE?

Micro enterprises are difficult to define but easier to describe and the available definitions vary from nation to nation and also from one institution to the other. There is no definition of micro enterprises that everyone agrees on, but the general description is any enterprise with less than five employees, small enterprise has less than 50, and medium enterprise  has up to 100 employees. Micro enterprises may also be defined in terms of the loan size or assets.

DOES ZMF LEND DIRECTLY TO MICROENTERPRISES?

No, ZMF does not lend directly to microenterprises. It lends to qualifying beneficiary organizations, such as MFIs, Microfinance Banks, and other registered financial institutions – which, in turn, on-lend that money to microenterprises and the economically active poor, as defined by and agreed with ZMF.

DOES ZMF SUPPORT ORGANIZATIONS THAT PROVIDE CONSUMER LOANS?

Organizations to which ZMF lends money to may, as part of their own service offerings, provide consumer loans and other types of financial services to diverse sectors of the economy. However, ZMF's money can only be used for microenterprise lending, which ZMF will closely monitor.

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