Reforming Microfinance to Suit Developing Economies: The Right Way and the Zimbabwe


There are few countries in Africa that possess as much economic potential as Zimbabwe, but it is plagued with racial and social inequality. One solution for alleviating poverty and promoting social equality is the use of microfinance. Microfinance has been successful in reducing poverty in many developing countries. Zimbabwe currently has microfinance institutions which serve the poor, but they are undercapitalized, unregulated, and are more interested in generating profit than creating meaningful economic growth for Zimbabwe.The Zimbabwean government has stated its commitment to improving the microfinance sector in order to help alleviate poverty.The Zimbabwean House of Assembly is currently reviewing a bill, the Microfinance Act, which will bring much-needed reform to Zimbabwe’s microfinance industry. Although a well-run microfinance industry will not solve all of Zimbabwe’s economic problems, it could be the key to helping Zimbabweans escape poverty. In order to fully understand the potential impact of microfinance reform in Zimbabwe, it is important to understand Zimbabwe’s informal sector. The informal sector is a large component of Zimbabwe’s economy, and it could benefit tremendously from sound microfinance reform.


Racial Discrimination, Inequality, Wealth, Microfinance, Africa, Informal Economy, Zimbabwe



Vincent D. Baumann (Washington University in St. Louis, School of Law)



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