Abstract:
The aim of the study was to analyse the credit risk management employed by Microfinance Institutions in combating credit risk during Corona virus (Covid 19) pandemic in Zimbabwe. This was done by looking at the challenges faced by MFIs in credit risk management during the Covid 19 pandemic and the impact of credit risk
management strategies on credit risk in MFIs with operations in Zimbabwe during Covid 19 pandemic. Sequential explanatory research design was adopted. The study also adopted a stratified sampling technique. A total of 270 questionnaires were distributed to employees of regulated MFIs who consisted of credit risk analysts, loan officers and general managers. A total of 40 interviews were administered to the clients of regulated MFIs. The study revealed that MFIs in Zimbabwe mainly lend to self-employed people. The study revealed that the main challenges experienced by MFIs in using credit risk management strategies during Covid 19 pandemic were the loss of income by MFIs clients and Covid 19 induced lockdown which resulted in
restrictions in movement and hindered debt collection by MFIs. The study found that MFIs used visits to clients, phone calls, loan restructuring, penalties and threats as methods of enforcing loan repayments during Covid 19 induced lockdown .The multiple regression analysis found that the independent variables namely design of
the loan product, screening of clients or expert systems, credit committee, credit policy and management of delinquency were statistically significant at 5% and had a negative impact on credit risk in MFIs during the Covid 19 pandemic. The study recommended that in light of Covid 19, MFIs should integrate technology in their
lending activities and they should restructure loans so as to improve repayments fromthe clients.