Status Update - August 13, 2012

This spring, MicroKing's delinquency rates became abnormally high. As a result, the organization has decided to restructure part of its Kiva portfolio. It will be re-evaluating the repayment terms of certain borrower groups to ease the burden on clients who are having difficulty repaying their loans on time.

Unfortunately, it is impossible to change the repayment schedule of a loan once it is posted to Kiva. This means that clients may show up on Kiva as delinquent, even though they are not. This is becauseMicroKing is collecting less per installment than reflected on the website. For example, a loan that originally had a 12-month repayment term may be restructured to 18 months so that the client can pay less per installment.

MicroKing's decision to restructure will affect delinquency rates in two places on Kiva:

1. MicroKing's overall delinquency rate will be artificially high.

2. MicroKing borrowers may appear delinquent on Kiva when they are actually paying back on time per their restructured payment schedules.

MicroKing attributes repayment difficulty to seasonality and low-liquidity during the months of January, February and March in Zimbabwe. During this period, many people need to pay school fees, and agricultural workers must buy inputs like seed and fertilizer. The lack of disposable cash in the market hurts Kiva borrowers who are primarily employed in retail and cross-border trade.

Last updated August 13, 2012

Partner Description:

MicroKing Finance is one of Zimbabwe's leading microfinance institutions and provides savings and credit services to micro, small, and medium enterprises in Zimbabwe.  As of the first quarter of 2011, the institution had 7 branches in Zimbabwe in Harare, Chitungwiza, Masvingo, Mbare, Mutare,  Bulawayo and Gweru.  MicroKing serves more than 10,000 clients with a portfolio in excess of US$7M.

The microfinance market in Zimbabwe is highly underdeveloped and continues to adjust to the new realities of the Zimbabwe economy.  Prior to 2009, the Zimbabwe dollar was the only permissible currency for business transactions and was rapidly devalued from hyperinflation:

Year       Inflation rate (consumer prices)

2002       134.50 %
2003       384.70 %
2004       133.00 %
2005       266.80 %
2006       976.40 %
2007       12,563.00 %
2008       11,200,000.00 %

In early 2009, the Reserve Bank of Zimbabwe formally allowed the US dollar to operate as a secondary currency and, practically, became the primary currency of transactions in the country.  MicroKing and it clients almost exclusively transact in US dollars as of early 2011.

During the period of hyperinflation, microfinance loans in Zimbabwe were extended for extraordinarily short terms and generally to cross-border traders.  As of early 2010, loans continued to be extended over short time horizons reflecting short term financing for portfolios, concerns about continued economic and political stability, and frequent borrower business orientations to quick turnover activities

MicroKing has a long history in Zimbabwe and was originally founded in July 2001 as a division of Kingdom Bank Limited, a commercial bank in Zimbabwe, to provide high quality financial services to the under-banked but rapidly growing Zimbabwean informal sector. Since 2005, MicroKing has been 100% owned by Kingdom Financial Holdings Limited and is registered as a microfinance institution through the Reserve Bank of Zimbabwe.  The organization is financed by Kingdom Bank, a sister entity, as well as via loans from Triple Jump (Dutch microfinance lender) and Mercy Corps (on an agricultural value chain project).

Kiva loans at MicroKing are unique and are only provided to group loan clients.  Kiva loans have the following attributes:

Loan Term: 3-24 months
Grace Period: 0-4 months
Interest Rate: 36% annualized declining balance
Fees: 5% upfront
Compulsory Savings: None

Pricing on Kiva loans is significantly reduced (40% lower than non-Kiva loans) but provided at levels that ensure MicroKing can remain sustainable.

Note: MicroKing's loans are guaranteed against institutional default (failure of MicroKing to repay Kiva lenders if the borrower repays MicroKing) by MicroKing's parent company: Kingdom Financial Holdings Limited.

Repayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Mar 30, 2011 Oct 12, 2005
Total Loans $1,878,000 $582,899,350
Amount of raised Inactive loans $0 $412,675
Number of raised Inactive loans 0 393
Amount of Paying Back Loans $255,450 $117,043,450
Number of Paying Back Loans 248 123,498
Amount of Ended Loans $1,622,550 $465,443,225
Number of Ended Loans 793 591,918
Delinquency Rate 3.63% 3.74%
Amount in Arrears $5,855 $2,841,615
Outstanding Portfolio $161,226 $76,065,484
Number of loanDelinquent 21 11,732
Default Rate 4.03% 1.15%
Amount of Ended Loans Defaulted $65,383 $5,334,744
Amount of Ended Loans $1,622,550 $465,443,225
Number of Ended Loans Defaulted 114 16,795
Currency Exchange Loss Rate 0.00% 0.08%
Amount of Currency Exchange Loss $0 $480,684
Refund Rate 1.22% 0.77%
Amount of Refunded Loans $22,900 $4,494,225
Number of Refunded Loans 10 5,037

Loan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans to Women Borrowers 81.83% 74.17%
Average Loan Size $442 $418
Average Individual Loan Size $646 $656
Average Group Loan Size $2,195 $1,827
Average number of borrowers per group 5.1 8
Average GDP per capita (PPP) in local country $400 $3,433
Average Loan Size / GDP per capita (PPP) 110.47% 12.19%
Average Time to Fund a Loan 6.81 days 5.56 days
Average Dollars Raised Per Day Per Loan $64.91 $75.30
  Average Loan Term 7.14 months 10.29 months

Journaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 324 291,503
  Journaling Rate 35.81% 42.36%
  Average Number of Comments Per Journal 0.00 0.08
  Average Number of Recommendations Per Journal 0.00 1.90

Borrowing Cost Comparison (based on 2013 data)

    This Field Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 61% PY 59.00% PY 33.64% PY
  Profitability (return on assets) 11.7% N/A -1.40%
  Average Loan Size (% of per capita income) 173.30% 138.00% 41.35%

Country Fast Facts

Field Partner Staff

Zvakanaka Bhasira
Llyod Bororwe
Mordecai Samuel Burutu
Lovejoy Chakwenya
Precious Chinyanga
Shamiso Dhliwayo
Gift Dube
Gloria Dube
Zibusiso Gumpo
Zibusiso Gumpo
Farai Gwela
Kudzayi Hove
Brian Jongwe
Brian Jongwe
Graham Kembo
Luckmore Kuwaza
Regious Mabika
Emelencia Machesa
Emelencia Machesa
Mercy Mapfuti
Paddington Muskwe
Melinder Ngwarai
Margaret Ntambalink
Nyasha Nyambuya
Tambudzai Nyamundanda
Leopold Ruswa
Briaton Saungweme
Edith Zambuko