A new dawn for Homelink

Homelink is likely the only quasi-fiscal unit created by the Reserve Bank of Zimbabwe that will not be sold off like is happening to other central bank investments made through the Finance Trust of Zimbabwe. Our Business Reporter, Africa Moyo (AM), spoke to Homelink Limited board chair Mr Morris Mpofu (MP) about the entity’s future. The following are excerpts of that interview.

AM: When you say now is the dawn of a new era for Homelink, what are you talking about?

MP: Homelink was established in 2005 with the prime objective of providing investment and consumption products to Diasporan Zimbabweans.

It became operational in 2005 and it started to engage Diasporan Zimbabweans through road shows that were conducted in the UK, the United States and other countries like South Africa.

Homelink engaged quite a number of agencies to reach out to Zimbabweans out there, and this Homelink operated from 2005 up to 2011 or 2012 thereabout when Government decided to dispose of the Reserve Bank’s non-core assets, including Homelink Limited.

In the period 2012 to 2013 and up to early 2014, Homelink was on sale. There were quite a number of bidders who wanted to buy Homelink because it had a very attractive liability-free balance sheet, and bids went over US$20 million … but the sale was not concluded by the time the current RBZ Governor, Dr John Mangudya, came in.

He realised that Homelink was a very critical asset for the RBZ and Government in general. Why? Because Homelink was established to mobilise foreign exchange resources.

You are aware that we are in a multi-currency system now; as we are in a multi-currency system now, our major sources of liquidity in the market are exports, Diaspora remittances, foreign investment and even external lines of credit.

So, Homelink, in its strategic sense, was meant to mobilise foreign exchange from the Diaspora and the Governor of the RBZ, Dr John Mangudya, managed to convince Government that the Reserve Bank needs to retain Homelink.

Homelink’s objective was also consistent with Zim-Asset as it also considers Diaspora as a very important constituency Zimbabwe’s development.

That is why when Government agreed that RBZ retains Homelink, the Governor appointed a new board and gave Homelink a new thrust.

Homelink was now supposed to re-energise itself, reinvigorate and try and now look at the Diaspora in a very different way.

So the global dimension that now Homelink looks at, and the expanded mandate it now has, gives it its new name.

AM: How successful have been your engagements?

MP: In September 2014 when the new board came in, we embarked on pilot road shows in the United Kingdom. We learnt a lot from the experiences and the mistakes of the past which allowed us to come back and redesign our vision and strategic intent so that it fits well with the expectations of Diasporan Zimbabweans.

The growth of Homelink is so much that it is going to have a lot of appendages and products. It is going to also show how competitive the Diaspora market can be.

AM: What projects can we expect from the new Homelink?

MP: Homelink has been restructured. It now has four strategic business units – Proplink, Easylink, Masterlink and Investlink. Proplink is the flagship.

Easylink is the money transfer agent of Homelink, which has been there since inception. It is a money transfer agent partnering Western Union.

It has 29 branches and we are going to open many more in Zimbabwe, including in remote areas.

In fact Easylink is the top-most money transfer agent in the country because it accounts for 30 percent of the country’s Diaspora remittances that come through the money transfer network.

It received US$85 million from January 2015 to July 2015.

Easylink is also moving ahead with new technology and trying to put in place more technologically advanced payment systems so that Zimbabweans that depend on Easylink branches continue to benefit from this technological advancement.

AM: There are concerns that the cost of using MTAs is punitive…

MP: Yes, the challenge with MTAs is the cost. Easylink payout, however, has the lowest cost in terms of receiving money because we keep our margins very low. We are a public company because we are owned by the Reserve Bank. Profit is not our prime objective but we need to be efficient and cost-effective. So, as Homelink, we maintain our costs at the lowest minimum so that Zimbabweans benefit. The reason why the Reserve Bank created Homelink is to formalise Diaspora remittances.

AM: Is Easylink confidnat that the cost of money transfers will decline?

MP: The entry of new players like Mukuru.com, WorldRemit, FNB, and telecommunication and Internet-based money transfer systems have brought in more options. Technological advancements have introduced more efficiency and competition and this is expected to lead to a downward review of costs.

AM: We also understand that you are now in the micro-finance business.

MP: Because Homelink does not only want to promote money being sent for consumption, it also wants to promote real investments in Zimbabwe. So under Masterlink, we offer very low-priced loans compared to other micro-finance institutions that offer loans at about 20 percent, 30 percent per month.

Masterlink offers loans at three percent per month.

Masterlink is also Homelink’s flagship for Diaspora outreach and will establish offices in the UK, US and South Africa.

AM: Has Masterlink started offering loans?

MP: Yes, it has been dishing out loans and it has also a very low non-performing book because we support productive investments and those productive investments are paying well. We have not yet hit the US$1 million mark in terms of the loans that we have given out but we want to grow that book to levels that have got micro-economic impact.

AM: What about Investlink. What kind of creature is this?

MP: Investlink is a business unit that has been created in this new Homelink. Like I indicated that we do not only want to concentrate on consumption but we want to also encourage Zimbabweans in the Diaspora to invest back home in the real sector.

So we established Investlink (and) because we are owned by the Reserve Bank, we interface closely. In fact, we have already established partnerships with the Industry and Commerce, Local Government, Tourism and Energy ministries.

AM: And you seem excited about the unit investing in property development …

MP: Proplink is our major driver because it has to do with housing development. Homelink established it for purposes of property development and management.

At Tynwald we have about 180 stands; of those 180, 100 will be sold as constructed houses and 80 will be sold as stands to Diasporan Zimbabweans.

Enquiries coming through are huge and demand is now 200 percent for those projects – Marlborough and Tynwald – and we think our outreach was very effective and that people are beginning to have confidence and trust in Homelink delivering.

The Marlborough project is an exclusive development. We have about 132 (apartments) we are going to construct there.

Proplink is not going to concentrate only on Harare. It has projects in Bulawayo (Parklands) which are being developed. We have other areas like Masvingo, Mutare.

We are also engaging the Ministry of Local Government where we have been promised stands which we are going to develop.

The target at the moment is that by 2018 we should have developed over 30 000 stands.

Proplink is also going to develop commercial stands. It is going to develop shopping malls where Diasporan Zimbabweans are going to syndicate and become shareholders.

If you compare Zimbabwe to other countries in the region, especially South Africa, our shopping malls are not that attractive. So we want to come up with themes that will attract Zimbabweans to invest in those areas in many parts of the country.

AM: How much will Proplink invest?

MP: It is projected that the projects will require about US$50 million in the next three years. The company has set a raft of capital raising models which include local and Diaspora bonds as well direct loan capital.

The capital will be deployed as follows: Marlborough, US$12 million for 132 flats; Tynwald, US$10 million for 181 flats; Parklands, US$8 million for 190 flats; and Government land around the country, US$20 million for 30 000 stands.

The total is US$50 million for 30 503 units.

AM: What are your mortgages?

MP: We try and design terms that accommodate Diasporan Zimbabweans and at the same time making business sense. Our interest rate for the Diaspora is 10 percent to 12 percent and the deposit ranges from zero percent to 30 percent.

So it’s all about the capability of the Zimbabwean in terms of the credit assessment we conduct. We want as much as possible to have a very clean book.

AM: Will locals also benefit from these projects?

MP: We have a policy which says 70 percent Diaspora and 30 percent local. Whatever product we roll out, we accommodate locals … but our prime objective, our major stakeholder as Homelink, is the Diasporan Zimbabwean.