Profitability Determinants in Microfinance Industry: Case of Zimbabwe (2010-2014)

  • Blessing Katuka FMC Finance Pvt Ltd
  • Ranga Mathias Mavhunga FMC Finance Pvt Ltd
Keywords: Profitability, Government of National Unity, Multiple regression, X-efficiency, Zimbabwe


This paper looked at determinants of profitability of microfinance institutions operating in Zimbabwe. The study employed case study approach on one credit-only MFI in Zimbabwe. Using Multiple Regression Techniques, the study identified profitability determinants in the Zimbabwean microfinance industry using 2011-2015 monthly data. Major findings were that ROA and ROE are influenced differently by cost efficiency ratio, cost per borrower ratio and GNU. The study showed that both ROA and ROE are negatively influenced by cost efficiency and cost per borrower ratios. The identified relationship supports the X-efficiency hypothesis which assumes negative relationship between cost/income ratio and profitability. ROA model detected GNU as significant variable and according to results, the variable has negative influence on ROA. To improve profitability in the Zimbabwean microfinance industry, the researcher recommends MFI managers to closely monitor cost efficiency and cost per borrower ratios. The study also roped in government as key stakeholder in driving profitability within the microfinance industry. The study recommends Zimbabwean government to pursue consistency in its political policies as well as systems.

Author Biographies

Blessing Katuka, FMC Finance Pvt Ltd
Front Office, Branch Supervisor
Ranga Mathias Mavhunga, FMC Finance Pvt Ltd
FMC Finance Pvt Ltd, Group CEO


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How to Cite
Katuka, B., & Mavhunga, R. (2016). Profitability Determinants in Microfinance Industry: Case of Zimbabwe (2010-2014). Journal of Global Economy, 12(4), 219-242. Retrieved from