WORK at the much-awaited Zimbabwe Women’s Microfinance Bank (ZWMB) has started in earnest following the official opening of the financial institution by President Mnangagwa last week, with a top official indicating that they are targeting to open at least 60 000 accounts in the next six months.
The bank, which still has one branch in Harare, is already making in-roads across the whole country after deploying agents that are operating from ward, district and provincial levels. Thousands of clients across the country, including men and small to medium scale enterprises, have already opened accounts and are able to make their initial deposits through mobile money transfers.
The bank, whose mission is to economically and socially empower women, opened its doors to the public about a fortnight ago.
Plans are in place to open a Bulawayo branch by December, before moving on to Mutare and Masvingo. ZWMB was licensed by the Reserve Bank of Zimbabwe in terms of the Microfinance Act (Chapter 24:29), and it is a first of its kind in the Sadc region.
It has a deliberate focus on women, who constitute 52 percent of the country’s population but remain largely excluded from economic activities due to lack of security of tenure.
ZWMB’s chief executive officer, Mrs Mandas Marikanda, said the bank seeks to champion women’s financial inclusion through availing affordable loan facilities on flexible conditions.
“Women have remained financially excluded from financial services despite the presence of many financial institutions. Banked adult women are a paltry 27 percent according to a Finscope survey.
“This is because the women’s desks made available in other financial institutions are not adequately addressing women’s challenges through providing women-centric products.”
Relaxed banking requirements
ZWMB has committed to deal with this challenge by relaxing banking requirements. Only a copy of an identity document is required for those who just want to open an account that allows them to transact. But for those seeking access to the various loan facilities, they will have to provide normal account opening requirements, although proof of residence can be in the form of utility bills, a letter from employer, letter from schools, headmen or chiefs or an affidavit signed by the landlord. This flexibility will make things much easier for those who do not have utility bills.
Low interest rates
Personal loans for day-to-day needs as well as asset loans will be accessible to individuals and groups of up to 10 people on an interest rate of 4 percent.
Last year, the RBZ capped interest rates at 12 percent per annum, although this is still considered too high when compared to other countries in the region. The high costs of lending have been cited as one of the impediments deterring individuals and firms from borrowing to finance working capital requirements.
Dealing with NPLs
Mrs Marikanda is confident that the group lending model will discourage the occurrence of non-performing loans. She pointed out that groups seldom default on repaying loans as they are built on strong social fabric.
“Group lending will mostly apply to those who have neither lending history nor collateral. You will find that when people come together from their communities, they already know and trust each other and therefore they co-guarantee each other. In fact, they will have group constitutions that will bind them into paying back the loans.”
This model empowers the extremely marginalised members of community to approach financial institutions for loans.
And to guard against non-performing loans, especially considering that unsecured loans will be availed, the ZWMB will have an eagle eye on the projects, starting from the proposal stage up to implementation.
“The targeted client in this instance has a very low rate of defaulting.
“Traditionally marginalised groups seldom default. When a micro-entrepreneur or micro-farmer who needs say $1 000 to kick-start their operations establishes a relationship with a funder, they strive to maintain that relationship.
“If you randomly check among the non-performing loans that are a perennial headache in most banks, you will find the rate is higher among those who are perceived to be established and borrow big.”
Through Chenesa Zita, blacklisted borrowers will be a given a chance to redeem their names through ZWMB’s persistent monitoring.
Mrs Marikanda also said ZWMB will redefine microfinance in Zimbabwe.
“Truth is, what most microfinance institutions are offering is money lending and consumer loans. There is no mechanism to follow up on whether the money is channelled towards the intended purpose; the ultimate goal is just to collect the interest. Whether or not the client is ensnared in a debt trap is irrelevant to the institutions. Yet microfinance is supposed to practise responsible lending. While most institutions just look at net worth when lending, we look at integrity and the viability of the proposed project. The funds availed are supposed to be commensurate with the borrower’s requirements as well as their ability to pay back.”
The bank has got several partners that will capacitate clients on financial literacy. Mrs Marikanda said they will be working closely with the Ministry of Women and Youth Affairs, that of Agriculture (Lands, Agriculture & Rural Resettlement) and the Zimbabwe Farmers’ Union. “This cannot be a one-man journey, otherwise it becomes an extremely expensive banking model to follow, hence we are riding on already established teams that have been set up by our various partners.”
Affordable medical insurance
Apart from financing small-scale farmers and entrepreneurs, some of the services offered by the bank include a micro-medical aid scheme targeting the previously uninsured populace in which a family of six can pay $6 per month to access an annual global limit of $1000. With statistics showing that a large portion of the Zimbabwean population remains uninsured, this scheme is likely to change the face of medical insurance.
Clarion call to NGOs
The firebrand CEO called on non-governmental organisations to consider putting aside revolving funds that will empower communities, instead of handing out food stuff.
“We should not enjoy handing over food year-in year-out so that people remain dependant on us. Empowerment is crucial so that they can stand on their own.”
Meanwhile, the Minister of Women and Youth Affairs, Honourable Sithembiso Nyoni has encouraged people to embrace the bank and the opportunities it offer, instead of focusing on the myth that it is partisan. Mrs Marikanda is married and is a mother to three girls. She has vast experience in microfinance having worked in the sector since 1995. She has sat on boards for several microfinance institutions, including the Zimbabwe Microfinance Institutions (Zamfi).
ZWMB was licensed by the RBZ in September 2017, although it was given the green light to start operations in May this year.
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