LIVINGSTONE MARUFU
Listed financial services firm, ZB Financial Holdings Limited has upped
its bid to open an SME bank this year which mainly caters for those with
movable assets who were previously rejected by banks, an executive has said.
The bank effectively joins other financial institutions such as FBC, Agribank and Stanbic that have deliberately targeted the informal sector.
Independent estimates suggest that SMEs contribute over 50% of gross domestic product while employing about 60% of the population.
However, with Covid-19 ravaging already fragile economies like Zimbabwe’s most SMEs will be closed forever due to lack of capital,
space to operate and lockdown regulations.
ZB chief executive Ron Mutandagayi told Business Times last week that the bank awaits Reserve Bank of Zimbabwe (RBZ) approval and expects the unit to be operational before year-end.
“Licensing for a microfinance business in the group, which was expected before the end of 2019, was delayed and operations are now expected
to commence in 2020, only after the RBZ has given us the green light to do so.
“This unit will cater for those with movable assets to get loans from our bank.
Previously, when you were not a civil servant or a person with the unstable salary the bank used to bypass your application but now that even vehicles or other movable assets can help one to get a loan.
“We used to leave out those without payslips but with your movable asset you are entitled to our loans under this microfinance unit,” Mutandagayi
said.
During the recently published 2019 results, ZB posted a net profit of
ZW$433.6m in 2019, a 467% improved outturn compared to the loss of ZW$118.2m posted in 2018.
The group’s total assets reduced in real terms by 14% to ZW$3.5bn as at December 31 2019 from ZW$4.1bn as at December 31 2018, reflecting a growth rate below average inflation.
Growth in deposits and other related funding account balances were constrained, achieving a reduction in real terms of 49% to ZW$1.372bn as at December 31 from ZW$2.689bn in 2018.
Earning assets reduced by 35% to ZW$1.8bn as at December 31, 2019 while
constituting 51% of total assets (68% at December 31 2019 from ZW$2.7bn as at December 31, 2018).
The group was able to maintain a comfortable margin of safety on its
liquidity requirements, closing the year 2019 with a liquidity ratio of 88% (81% on 31 December 2018) against a prescribed ratio of 30%. The
group’s total equity increased by 104% from ZW$739.1m as at 31 December, 2018 to ZW$1.506bn as at December 31 2019, driven by the positive performance for the year as well as gains on the revaluation of properties and equipment ZB Bank Limited posted a profit of ZW$215.5m in
2019, an improvement from a loss of ZW$41.1m in 2018.
Performance was driven by fair value adjustments on investment properties as well as the revaluation of the foreign exchange position.
The group established Syfrets Bureau de Change during the second quarter
of 2019, operating under its banking business segment.
Business volumes in the early stages were substantial, tapering off only when the exchange differential between the interbank exchange rates
and rates obtaining on the parallel market started to widen.
Meanwhile, RBZ estimates that there could be US$2.5bn circulating in the
informal sector, a FinScope MSME (micro, small and medium enterprises) survey that was conducted by the Ministry of Small and Medium Enterprises and Cooperative Development in conjunction with FinMark
Trust and the World Bank in 2012 concluded that the turnover in the informal sector was more than US$7.4bn.
Government and private investors are increasingly focusing on SMEs as high growth zones.
The Small Medium Enterprises and Development Corporation is now under
the supervision of the RBZ following the amendment to the Small and Medium Enterprises Act.
In addition, Proparco, a development finance institution that is partly owned by the French Development Agency, recently extended two facilities worth US$20m in support of SMEs through NMB Bank and CABS in February and March 2014, respectively.
ZB Financial Holdings has registered 3 000 agencies to tap the country’s huge unbanked market and channel more resources to the mainstream economy.
