|
|
|
|
 |
|
UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 11 / April 2005 |
|
Zimbabwe's Third Largest Commercial Bank Promotes Microfinance:
As Donor Funding Nears End, CBZ Ready to Expand Access for Microbusinesses By Dyson Z. Mandivenga, Head-Microfinance, Commercial Bank of Zimbabwe, Jewel Bank Today, 75% of all Zimbabweans are classified as poor and the unemployment rate stands at around 60%. This is a situation of economic and social crisis. With half the country's population under 15 years of age, the overriding question is how these young people are to develop productive livelihoods. In light of the ever-spiraling costs of basic goods and increasing household poverty, this is a major challenge. Microfinance is one of the economic structures that can reduce the strains and stresses these people must deal with. The Commercial Bank of Zimbabwe, Jewel Bank (CBZ), is currently the third largest bank in Zimbabwe, with 27 branches around the country. It has an extremely good reputation, having won the Euromoney award for best bank in Zimbabwe in 1999 and 2000, and it is known for its commitment to small entrepreneurs. As part of its diversification strategy in the early 1990s, CBZ began to explore the possibility of developing a product for Zimbabwe's urban and peri-urban informal sector micro-enterprises. This move was a first in the history of banking in Zimbabwe. At this time, CARE International was already trying to encourage commercial banks to become involved in microfinance. Few banks took up this opportunity, but when CARE approached CBZ, the bank agreed to join forces with the NGO, and so began a mutually beneficial partnership. Although the Managing Director was convinced of the project's viability, most of CBZ's management team and shareholders thought otherwise. Thus, a third partner, the British Government's Department for International Development (DFID), joined the venture. DFID agreed to provide funding, in tranches, over a period of ten years for it, as it too felt that it was a great opportunity to show other banks in Africa and further afield that moving into microfinance could be profitable. The year 1995 saw the launch of the 1995-2000 phase of 'Credit for the Informal Sector Project' (CRISP), which aimed at increasing incomes and creating jobs by improving access to credit for informal micro- business located in the urban areas of Zimbabwe. DFID funding covered the start-up costs, operational costs, and the Loan Guarantee Fund (LGF) to cover any initial losses on the part of CBZ. DFID also paid for technical assistance, which was provided by CARE. CBZ's microfinance programme was implemented by its own microfinance unit - the Community Banking Unit (CBU). It has its own loan officers, administration, and head office staff, but shares counter staff with CBZ. The CBU head office was set up in CBZ's main head office, with other units initially being set up in four CBZ branches. At the end of Phase I (1995-2000), the CBU had a portfolio of US$32 million and more than 3,000 active clients. In addition, 90% of the loan portfolio was financed from clients' savings and the number of savers exceeded the number of borrowers. Phase II (2000-2005) of CRISP aims at further expanding access to financial services to both the urban and the rural poor. Helping rural areas, where poverty is more widespread, can translate into greater economic gains. This is of particular help to women, who represent a large percentage of proprietors of such rural enterprises. CRISP II also offers increased support to HIV/AIDS-affected households, where extended families are unable to provide a safety net because of the devastating effects of the disease. By the end of CRISP II, it is hoped that the CBU will have made over 20,000 loans and have reached out to 7,500 new clients. Now in its ninth year, the CBU has established operational systems, experience in microfinance methodologies, and has been accepted by mainstream CBZ staff as a valid and important part of CBZ operations. As a result, CBZ believes that when DFID funding comes to an end next year, its CBU will be able to continue and expand its business. Annah Mamundo: A Jewel Bank Success Story
Annah Mamundo is one of the many successful women clients of Highfield's Jewel Bank and should be an inspiration to all future women entrepreneurs. Born in Harare Hospital and educated to Standard 5 at Chipemberi Primary School, Annah is like many other women of her generation: the skills she has are self-taught and she has had to rely entirely on her own determination and ambition to make it as a professional working woman. In 1996 Annah approached Jewel Bank and obtained what would be the first of five loans to establish and expand her own business. At first, with a start-up loan of Z$8,000 she made and sold Freezits, and so successfully that she was able to sell her business on in 1998 and move on to selling take-away sadza and relish in the market at Machipasa. From a single paraffin stove she was able to provide lunches for 50 people for $3 a head. By now she was employing two other women and had a regular, demanding, and growing client base. In 2000 Annah diversified further. She moved into rented indoor premises that are just a short walk from Highfield's Jewel Bank in order to be able to expand the breadth of her catering outfit. She also opened a small dressmaking shop and employed one tailor. Since then, Annah had gone from strength to strength. Her three tailors now supply cross-border traders as well as the local community with hand-made and well-finished embroidered garments made from traditional prints and modern materials. Her restaurant, 'Mai Dau's Place', is open six days a week and serves breakfast, lunch, and snacks to a constant stream of customers. Today, her two businesses are thriving and employ a total of 12 people, many of whom are her own grown-up children, and she has already been able to save enough money to buy vehicles for herself and her husband, who works in the formal sector. Annah is now looking forward to buying her own premises and opening a larger restaurant with better furniture. She is also hoping to take advantage of Jewel Bank's forthcoming micro-leasing scheme and so acquire a deep freeze. Encouraged by her success, two of her friends and one of her daughters have also taken out microfinance loans through Jewel Bank, which Annah says has been 'a very good friend.' |