The country’s biggest insurance firm has already expressed interest in a number of local micro-finance institutions, including MicroKing, a subsidiary of AfrAsia Holdings, group chief executive Mr Jonas Mushosho told The Herald Business this week.
“Old Mutual recognises the shift that has happened in Zimbabwe’s economy where the informal sector now accounts for a significant part of the economy,” he said.
“Old Mutual believes it can play a role in supporting the informal sector and as part of its strategy, Old Mutual believes partnering a micro-finance company would provide a good platform for funding the informal sector.
“In view of this, Old Mutual, has considered the acquisition of a number of micro-finance businesses, MicroKing included.
“At this stage, however, Old Mutual has not made a bid for any of the micro-finance businesses in the country,” he added.
Mr Mushosho said once a suitable entity had been identified, Old Mutual would go through its normal investment process, which includes a due diligence. This will enable us to invest in a business which can create value for both shareholders and policyholders.”
The informal sector is thriving and continues to grow despite the liquidity challenges which continue to affect big businesses. With over 70 percent of the population living in the rural areas and the bulk of the urban population operating in the informal sector, the sector has become the biggest employer in the country.
Analysts say the need for growth in the micro-finance sector has become of paramount importance. They also noted that with most MFIs lending to urban-based businesses, there is a lack of micro-credit, micro-insurance and micro-deposit taking institutions in the rural areas, where the bulk of the population lives.
As such, the private sector players need to move beyond the traditional urban micro- finance model.
Economic analysts further noted that the current growth in small-scale agriculture and related downstream industries creates a viable growth market for micro-lending.
The demise of the old economy controlled by multilateral corporations was a boon for micro-small and medium enterprises and the informal sector. The new economy has created a new revolutionary economic and social paradigm.
The culture of being an employee for big business has been replaced by an empowerment mentality in which most Zimbabweans have literally become their own bosses.
While a lot of workers had seemingly been thrust into joblessness as a result of the shrinking formal sector, there has been a substantial redistribution of wealth from big business to small business, thereby empowering previously unempowered workers.
Traditional big entities have been replaced by SME’s, informal traders and small-scale commercial farming in agriculture, mining, retail, manufacturing and construction.
This assertion is amply supported by results of a Finscope small and medium enterprises survey, which showed that immense potential benefits could be derived from the informal sector.