Friday 5th July:
In light of the rapid devaluation of the Zimbabwean local currency (the RTGS) against the USD and the announcement from the government on Monday 24th June that it was banning the use of all foreign currencies as legal tender, our partners in Zimbabwe have decided to temporarily pause fundraising for their clients on the Lendwithcare platform. The Lendwithcare team will continue to work very closely with our partners over the coming weeks to work out a way to settle any outstanding USD loans to our lenders and importantly, how we can continue to support women entrepreneurs in Zimbabwe with our much-needed funding. While we work out a way to manage foreign currency repayments in such a complex and challenging macroeconomic climate, we will not be adding any new loans from Zimbabwe to the website and we have paused repayments from all outstanding loans. This does not mean that the entrepreneurs you have supported have been unable to repay their loans – in fact, repayment rates remain incredibly high at over 92% - but our local partners are unable to remit these funds back to the UK at the moment.
As ever, we are incredibly grateful for your continued understanding and support of the situation in Zimbabwe and we promise to keep you updated. If you have any questions or concerns, please get in contact with the team here [email protected].
Thursday 16th May:
After months of economic instability following a change in government and the introduction of a number of new monetary policies, the Reserve Bank of Zimbabwe (RBZ) has decided to carry out a 'managed float' of the local currency, the bond. The announcement of this 'managed float' on the 20th February has effectively created a new national currency for Zimbabwe. Since 2009, the national currency of Zimbabwe had been the US Dollar but a severe shortage of hard currency meant that locally Zimbabweans traded in bond notes and electronic funds, a quasi-currency which, at the time, was officially pegged to the US Dollar. Since the new monetary policies were introduced in October, the bond note and electronic payments began to significantly lose value and have been trading at more like 3 to 1 than the official 1 to 1. By floating the exchange rate, the RBZ hoped to lessen the demand for US Dollars and settle the local currency (now known as the RTGS - Real Time Gross Settlement) by recognising its true value. However, since this announcement in February, the Zimbabwean economy has been far from settled and uncertainty is at an all-time high. The annual inflation rate has soared to 75.86% (compared to a current rate of 2.17% in the UK) and people's savings have been wiped out as bank balances are being adjusted to reflect the true value of the new local currency.
So what does this all mean for our local partners in Zimbabwe and the women entrepreneurs they support? The truth is that it's still pretty unclear. Although the announcement of the new currency was a few months back now, there has been little guidance from the government to local businesses and organisations on how they should manage this significant change. What we do know is that the women entrepreneurs our two local partners support still need and want small loans to invest in their businesses, but the value of the loans we have made to our partners in USD are now being paid back at a significantly lower value. Based on this information (and after numerous conversations with our partners) we have decided that we will continue lending in Zimbabwe but that any new loan requests that come from our partner will be in the new RTGS amount rather than USD. We also need to adjust the value of repayments on previous loans to reflect their true current value. The latter point does mean that there will be a significant exchange rate loss on all outstanding loans in Zimbabwe. Exactly how much that is is unclear at the moment but we will communicate with all lenders who will be affected by this loss separately. We sincerely hope you understand our decision and will continue to support the people of Zimbabwe during this particularly difficult time.
Tuesday 12th February:
Here is the latest update from our partner Thrive Microfinance in Zimbabwe, on how the situation is affecting the entrepreneurs and the organisation:
"I think that the key to getting through these difficult times is to be very clear about your values and overall purpose but very flexible about how you operate on the ground. Thrive has the advantage of having people who are capable of doing this. It is also true that recent turmoil affects different groups very differently. Our urban borrowers have been more badly affected as they tend to exist more in the money economy and have higher costs of living generally. When compounded with having their structures and stock destroyed, this causes real suffering. Many of our rural borrowers, however, are less affected - plentiful recent rains and a good maize crop give them a lot of confidence. Their needs are quite different and we have to be able to be patient with those who are in difficulty whilst also providing extra funding for those who are pushing forward.
Generally speaking, our borrowers provide the basics to other poor people. Regardless of how bad the macro-economy, their customers continue to need the same things so our borrowers, even when they are really struggling, simply pick themselves up and carry on. Our job is to stay close to them and support them where we can."
Friday 1st February:
You may have read that many informal vendors have been ordered to dismantle their premises. As you are probably aware, some of the entrepreneurs we support with Lendwithcare loans have this type of business and are extremely likely to be affected in this recent development. We are in touch with our microfinance partners to find out more and will write to you if any of the entrepreneurs you have lent to are having difficulty repaying their loan.
Monday 21st January:
We heard from our other microfinance partner in Zimbabwe over the weekend. They tell us: “The situation in Zimbabwe is normalising after a tense week. On the 12th of January, the president announced a close to 150% increase in the price of fuel. This was followed by nationwide demonstrations from political activists on the 14th to the 16th, which turned violent in various parts of the country. Security has been on high alert since then. Another demonstration is anticipated for the 23rd to the 25th of January. The entire Thrive team is safe, although one of our branches was caught up in some of the violent demonstrations. Loan demand is beginning to recover but inflation is also beginning to rise. We hope it is a temporal spike. We will continue to monitor the situation and keep you updated.”
The economic situation is affecting the whole nation, including entrepreneurs who have received a Lendwithcare loan. However, as far as we're aware no Lendwithcare entrepreneurs have been directly affected by this specific incident of violence. If we receive any more updates from our partners in country we will share this with you.
Friday 18th January:
You may have heard that the situation in Zimbabwe is intensifying, and last night many citizens were left without internet access. We are trying to contact our colleagues at our microfinance partners in Zimbabwe to see how the latest developments have affected their operations. We will update you if we receive any more information from them. In the meantime, please rest assured that Lendwithcare will do our best to continue to work with our microfinance partners on the ground to provide loans and financial training to the women entrepreneurs of Zimbabwe.
One of our partners in Zimbabwe has told us that it has been a challenging week, with limited telephone and internet connection and an army presence on the street. There has been little group activity as the entrepreneurs are being advised to stay indoors. They are hoping the situation improves soon and will keep us posted with further updates.
If you would like more information about the current situation in Zimbabwe, please get in touch with the team at [email protected].