Cries over tight lending rules

20 May, 2018 - 00:05 0 Views
Cries over tight lending rules

The Sunday Mail

Livingstone Marufu
Zimbabwe’s rural folk and marginalised sectors are feeling the pinch of stringent requirements over loan facilities offered by Reserve Bank of Zimbabwe (RBZ)’s subsidiary, Homelink.

Due to high non-performing loans (NPLs), the banking sector and other lending institutions have tightened lending requirements to clients.

Those in the low income bracket feel the pinch more.

Worryingly, fears abound that while cutting back on lending might help maintain stability in the financial services sector, it could negatively affect economic activities and growth prospects.

Experts estimate that from the $15 million Women Empowerment Fund, youth empowerment fund ($10 million), and $5 million for persons with disability, only around $8 million was disbursed to applicants due to strict requirements by Homelink.

Scores of various groups were turned down by the financial institution, leaving the loans mostly accessible to the high-heeled and high-income groups.

Alious Mandishona (33), a farmer from Saratoga estate in Goromonzi, was turned down after failing to produce collateral in form of title deeds and a pay slip.

Desperate farmer

“I have heard numerous times that I can access loans from Homelink through our $10 million youth empowerment fund put in place by RBZ but to my surprise l have not been able to obtain the loan,” he said.

“Some of us are running flourishing projects at our respective plots so we need capital to increase productivity on farms but we are told about title deeds, which we don’t have,” said Mandishona.

“Although Homelink explained the need for collateral or pay slips, there is need for them to consider the potential of the projects that other people are undertaking and evaluate how much money they can give to those ones.”

“If they carry some field visits they can have a full appreciation of what some of us are doing on the ground,” he said.

Mandishona said he is running a two-hectare irrigation project growing peas and tomatoes but would like to expand to 10 hectares if given a loan.

Youths in informal sector

Meanwhile, some youths in the informal sector are facing the same problem. Simbarashe Munyati, a furniture manufacturer in Chitungwiza, told The Sunday Mail Business that he makes an average profit of $3000 a month but was turned down due to lack of collateral.

“Our family business makes a profit of around $3000 monthly but we have over five members there so we can’t realise meaningful revenue, therefore we need capital injection to boost our business, which we have run for over seven years now,” Munyati said.

“But we were turned down due to lack of title deeds and other things which can be used as collateral, we don’t know what to do.

Other Homelink facilities include a business linkage facility of $10 million, a micro-finance revolving facility of $10 million, a tourism support facility of $15 million, a gold support facility of $150 million, a cross-border facility of $15 million, a tobacco export finance facility of $70 million, a horticulture facility of $10 million, and a soya beans facility of $21,51 million.

Although defaults on loans in the banking sector dropped to 7, 08 percent by end of last year from 20,5 percent in 2015, small businesses continue to suffer due to lack of security.

Homelink Sales and Channels Manager Ms Sibusisiwe Mashoko said the $350 million SME facilities are moving on well.

She said there is need to ensure that the money is used accordingly and revolved to other people.

“We can confirm that various people are accessing loans from our facilities but we are very strict in the lending business to ensure that the money returns to benefit other people.

“Previous facilities collapsed due to lack of financial literacy on how to use loans obtained and failure to pay back.

“We have realised that more females repay back loans when compared to their male counterparts,” Ms Mashoko said.

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