The Sunday Mail
GETBUCKS Zimbabwe is poised for significant growth, driven by a strong capital base and plunging competition in a sector that has seen 30 micro-finance institutions (MFIs) exit the scene due to operating and capitalisation challenges, market watchers say.
The three-year-old financial technology services provider, which is set to raise US$3,2 million from an initial public offering that opened on December 7 and closes on January 8, 2016, has been growing its interest income at a compound annual growth rate (CAGR) of 163,69 percent and its net fee income at a CAGR of 163,53 percent.
Getbucks is also expected to raise capital when it lists on the Zimbabwe Stock Exchange on January 15, 2016.
With loan book growth in the MFIs sector slowing, more players could reduce focus or ultimately exit the sector, paving the way for Getbucks’ growth with strong backing from its cash-rich parent company, GetBucks Limited of Mauritius.
Market analysts Lynton-Edwards Securities say the growing informal sector presents a fertile hunting ground for growth for MFIs that are more flexible on collateral requirements than commercial banks.
“This gives (GetBucks) a significant customer base as MFIs do not necessarily adhere to the stringent requirements needed by large banks.
“If one looks at the credit requirements of the low income segment and the total supply of funds, it is evident that these funds are insufficient to meet the increasing demand for micro-credit.
“The mismatch is large and such a wide gap deserves due attention. It highlights the opportunity for micro-finance institutions to expand their operations on a much wider scale,” say Lynton-Edwards.
A Reserve Bank of Zimbabwe report shows that 30 MFIs have closed shop in the second half of the year as challenges of capitalisation take their toll on the sector.
Out of the 166 MFIs that are operational, about 80 percent are based in Harare and Bulawayo.
Analysts believe GetBucks is well placed to exploit existing opportunities in the sector due to its bias towards technology and a new deposit taking licence.
GetBucks lends from as little as US$50 and is on a spree of signing bigger clients to broaden its customer base.
Private equity firm, Brainworks Capital’s group chief executive and GetBucks non-executive director Mr George Manyere last week said the firm already had 20 000 customers and planned to grow them to over one million.
“We believe that there are more than a million people that are bankable within this model. GetBucks is currently sitting on just over 20 000 customers and we see that number growing in terms of our overall market that we are targeting.
“We have just scratched the surface,” said Mr Manyere.
Brainworks Capital holds 34,06 percent in GetBucks Zimbabwe while GetBucks Limited of Mauritius has 55 percent. Pension funds hold the remaining stake.
GetBucks’ loan book grew 88 percent to June 30, 2015 to US$11 600 480.
Last year the loan book grew by 389 percent.
This has seen the company declaring a US$2 million dividend in the last two years, representing 25 percent of its earnings, setting expectations for continued payouts.
Apart from having a positive impact on the share price of a listed concern, a strong history of paying dividends is desirable and serves as an indicator of future behaviour.
Lynton-Edwards says with shareholder equity of US$6 million and US$3,2 million from IPO funds, GetBucks is sufficiently capitalised to fund the loan book as well as meet the RBZ minimum capital requirement of US$5 million.
In an environment where NPLs are averaging 14 percent from about 20 percent a few months ago, GetBucks’ non-performing loans are only two percent of the book because it largely focuses on salary-backed lending.
GetBucks has 15 branches around the country and offers loans at 7,5 percent interest.
The RBZ has capped the interest rate at 18 percent.
