Kiva conducts regular, ongoing monitoring of all Lending Partners, but only posts status updates here in response to relevant, major changes at the partner.

Status update — October 29, 2019
In July 2019, the Zimbabwean government issued new legislation barring the use of US dollars and converting all prices and contracts previously denominated in USD to Zimbabwean dollars at a 1:1 ratio. The new Zimbabwean dollar was introduced in October 2018 and is currently going through a period of hyperinflation. Faced with this situation, we have paused all lending activities with Microhub and are working on a recovery plan for the outstanding loans. The situation in Zimbabwe is dire and has been disastrous for borrowers and lending institutions across the country. We will update lenders when we have more information.

Partner description:
Microhub Financial Services  is a fast-growing indigenous microfinance institution in Zimbabwe. The company provides financial services to the informal business sector through its accessible, affordable and flexible services, including access to credit. Microhub is also a member of the Zimbabwe Association for Microfinance Institutions – the umbrella body for microfinance institutions in the country. 

Zimbabwe suffers from a chronic shortage of available credit, in part due to many years of hyperinflation. This reduced the value of the currency and destroyed savings and capital.  Many financial institutions collapsed and those that survived are still weak. The instability in the economy and difficulty attracting investment has a direct effect on the population, 72% of Zimbabwe lives below the poverty line living on less than $1.90 per day, according to the World Bank.

Microhub plans to reach all of Zimbabwe’s communities with its credit products and is partnering an aggressive growth strategy with a focus on socio-economic impact. The organization aims to transform the quality of life for poor and marginalized communities. 

A unique lending approach:
Microhub uses funding through Kiva to provide 2 types of loans – individual working capital loans and group working capital loans. Individual working capital loans are designed to cater to individual entrepreneurs operating small businesses, these are often informal businesses that may be run from the home or involve members of the household. Group working capital loans are also designed to cater to individual entrepreneurs, however they will be organized into small groups of between 3 to 5 members and depend on group guarantees instead of collateral.

Microhub is also helping educate their clients to pay using digital payment methods, like point of sale machines, online banking, and mobile phone platforms. This is crucial as in Zimbabwe more adults reported having a mobile money account than an account at a financial institution.

A Note on Microhub’s Portfolio Yield:

We care deeply about the cost that Kiva borrowers pay for their loans, which is why fair pricing is a core part of our initial due diligence process for Lending Partners. With Kiva's 0% capital, many of our Lending Partners are also able to add additional value to their loans by reducing interest rates, offering non-financial services or creating new loan products.

For partners with reported portfolio yields or average APRs higher than 50%, Kiva takes steps to check that the high rates are justified by the impact of the loans. Kiva also verifies that the partner is not generating unreasonable profits or paying inflated salaries, and that the partner’s elevated operating costs are justified by its operating environment and/or the design of its loan products.

We seek to support loans that don’t impose an unjustifiable cost burden on hard-working borrowers. We nevertheless recognize that in order to reach vulnerable and excluded people with high-impact products and services, some of our partners incur high costs that necessitate charging higher-than-average costs to borrowers in order to allow for sustainability and scale. With this partner, Kiva capital is supporting a loan product that costs less than the partner's typical products.

Factors that drive up the costs that this partner organization charges its borrowers include:

• They provide more than just cash to many of their borrowers, including costly wraparound services such as healthcare, financial or business training, agricultural extension services, insurance or access to education.
• This partner is working in a country where doing business is difficult and costly due to regulatory, procedural and governance issues.
• They operate in an area with a limited or poorly functioning banking system. This makes it difficult to access funding locally, and makes it more challenging to send and receive payments on loans from outside the country.