Business herald: 11 APR, 2018 – 00:04 Dr Sanderson Abel Financial institutions play a pivotal role in the granting of credit to the various sectors of the economy.
A bank is just like a heart in the economic structure and the capital it provides is like blood in it. As long as blood is in circulation the organs will remain sound and healthy.
If the blood is not supplied to any organ then that part would become useless, so if the finance is not provided to any economic sector, it will be destroyed.
The availability of credit is important in every economy since households and firms are not in a position to generate enough resources on their own. Credit, which is the pivot for financing of business enterprise serves as an essential, facilitating agency in the primary economic functions of production, exchange, consumption and distribution.
In its simplest sense finance refers to those activities involved in seeing that an individual or organisation has the resources with which to pay its bills promptly
In their endeavour to provide funding to the various sector of the economy, banks develop various products to suit their customer needs. It is important for bank clients to understand these various products so that they approach their various banks with the knowledge of the type of product they require for them to derive maximum value from the credit products provided.
There are different types of financing that you can choose depending with the agreement with your bankers. For example, in acquiring business equipment, fixtures and fittings, you can choose to finance the acquisitions through an industrial hire purchase, leasing or a term loan. Some of the credit products offered by the banking sector are discussed below.
Term Financing: This type of loan is availed by the borrower to acquire fixed assets (immovable properties i.e. land and buildings and vehicles for commercial use). The loan carries a predetermined length of time (tenure), with repayments done in instalments.
Lease Financing: This type of facility helps the borrowers to acquire equipment’s and machineries for their businesses on lease. This type of finance is long Term in nature and as such, the repayment is made in instalments.
Overdraft (OD): This is a short term facility which is granted to the borrower to enable him meeting his day to day funding needs; like payment of salaries, utilities and purchases of inventories etc. An agreed limit is sanctioned by the bank and the borrower is allowed to draw that amount through his current account.
Revolving Credit: This type of loan is also short-term in nature and is used to meet short-term funding requirements of the borrowers. This type of loan does not have a fixed number of payments, as in the case of instalment loan.
Cash Finance and Running Finance are types of revolving loans. Once the loan limit is approved, then the borrower is free to withdraw amounts to the extent of that limit. The borrower can withdraw and repay the amount as many times as he wishes to; but he has to pay mark-up on the amount which he has actually used.
Letter of Credit (LC) or Documentary Credit (DC): Letter of Credit is a written undertaking by a financial institution in favour of the supplier/seller to pay him the amount of imported/purchased goods, in case the actual importer/buyer fails to pay
Unsecured financing: Unsecured loans are those where the banks do not demand tangible securities such as land, building, fixed/current assets, tradeable inventory etc. as security; whereas, in secured financing, the banks demand any of the security as mentioned above. Secured financing is also called collateralised financing.
Credit provision by the banks to their clients through the various channels outlined above gives an obligation towards the borrower to dutifully service the obligation.
Failure to honour that obligation will disturb the whole credit system leading to reduced resources to other potential borrowers. In other words, the potential funding by the banking system is seriously reduced. Resultantly, the problem of credit impairment drags on the economy in the following ways: disintermediation of bank-system lending caused by the erosion of banks’ profitability; stagnation of economic resources, such as labour and capital, in fields with low productivity and cautious behaviour of corporations and consumers due to a decline in confidence in the financial system.
It is now an indisputable fact that economies are dependent on their growth and development on the provision of credit by the financial sector. Corporates, individual and other players provide credit to one another with the banks lying at the centre of the system. A cycle of credit is thus created in an economy where each economic agent is one way or the other in receipt of credit from another directly or indirectly. Any hiccup within the cycle might end up disturbing the smooth flow of resources among the economic agents.
On a broader macroeconomic level, this would translate to economic stagnation as some sectors become grappled with working capital and capital challenges as they fail to access loans and overdrafts from the banks while those who access the resources fail to repay as a consequence of the high cost of the funds.
Dr Sanderson Abel is an Economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on abel@baz.org.zw or on numbers 04-744686 and 0772463008.
The rapidly changing landscape of digital lending March 12, 2018
Taking stock of the top seven emerging digital lending models By Priya Punatar
The rapidly changing landscape of digital lending March 12, 2018
Taking stock of the top seven emerging digital lending models By Priya Punatar
Last year, Amazon grabbed headlines by giving $1 billion in small-business loans to over 20,000 merchants in the United States, Japan, and the U.K. Their near real-time data on sellers’ businesses and access to customer reviews allow Amazon to evaluate customers and manage the risk of lending to small merchants. WeChat also made waves when it entered the game in 2015. As China’s largest social network, it’s been able to deploy more than US$14.7 billion in funds in just two short years. Like Amazon, WeChat benefits from access to data and the ability to offer convenience and efficiency for the customer — it only takes 0.3 seconds to approve a loan application. These tech giants have joined a host of other players in a continually evolving digital lending ecosystem. Other prominent digital lenders include Konfío in Mexico and Kenya-based Kopo Kopo. Each platform in this space leverages technology to offer loans that are faster, more cost-efficient, and more straightforward for the customer. Digital lending is proving to be a potent force for reaching people who haven’t been able to access financial services in the past. Innovative products can overcome the challenges of geography, reduce transaction costs, and increase transparency. But distinct market structures, regulatory environments, and customer needs have led to a wide variety of digital lending models that are each tackling financial inclusion in different ways. When we evaluated the current state of play, we identified seven primary digital lending models: • Online lenders. These lenders offer full end-to-end digital lending products online or via mobile applications. In this model, customer acquisition, loan distribution, and customer engagement are entirely digital. This process is specially designed with no need for face-to-face contact or even for customers to phone a call center. Fintech companies like Lidya, Branch, and Tala are online lenders that help entrepreneurs access funding in emerging markets, including Nigeria, Kenya, and the Philippines. • P2P platforms. P2P platforms are purely digital platforms that match a borrower with an institutional or individual lender and facilitate the digital transaction. The platform typically plays an ongoing central role in the relationship between these parties. In this model, P2P lenders like CreditEase and KwikCash often design the product, score the borrower, and may support repayment and collection processes. • E-commerce and social platforms. These platforms include the likes of Amazon and WeChat. These are digital platforms where credit is not their core business, but they leverage their digital distribution, strong brand, and rich customer data to offer credit products to their customer base. • Marketplace platforms. Marketplaces, like Loan Frame in India, are digital platforms that use proprietary algorithms to match a borrower with the right lender. Lenders typically use these types of platforms to acquire new customers, and they pay an origination fee to the platform. Once funds are dispersed, the customer relationship is direct with the lender. • Supply chain lender. Firms such as Tienda Pago and M-Kopa Solar provide digital short-term working capital loans for microenterprises to purchase inventory from their distributors or for pay-as-you-go financing of an asset purchase. The distribution network enforces repayment through penalties if necessary. For example, suppliers might withhold deliveries of goods or turn off utilities in the case of late payment. • Mobile money lenders. Firms such as Kopo Kopo partner with mobile network operators to offer mobile money loans to their customer base, leveraging mobile phone data for credit scoring. In this model, physical agent networks where customers can go to complete cash-in/ cash-out transactions supplement the digital interface of the mobile phone. • Tech-enabled lenders. These are traditional lenders who have embraced technology to digitize part of their otherwise manual lending process. This digitization could include adding digital acquisition channels or digital repayment options. Tech-enabled lenders like Aye Finance in India and Accion Microfinance Bank in Nigeria, supplement their physical distribution networks with technology — providing a ‘tech and touch’ approach. Adding to the complexity of the digital lending ecosystem is its dynamic nature, which makes strict categorization difficult. Key players continue to test, refine, and evolve their business models and value propositions based on customer needs and market experience. For example, Creditas, a digital lender in Brazil, started solely as a marketplace platform but has subsequently moved into credit scoring, customer engagement, and financing solutions for customers, to become an online lender. JUMO, an online lender in Kenya, started as an end-to-end mobile money lender but is moving away from funding its own portfolio and becoming a marketplace platform. Innovation and market expectations will continue to alter and refine the digital lending landscape. However, the similarities shared by today’s successful models are likely to remain prominent: they digitally source customer data, rely on hundreds, and even thousands, of data points to score customers, offer instant and remote approval, create data-driven mechanisms to drive repayment, and engage customers digitally. Advanced digital lenders have leapfrogged over traditional lenders to provide customers with a faster, more transparent, and convenient service. Traditional banks will have to give customers similar benefits if they hope to compete. To learn more about the ways that digital lending is advancing financial inclusion and how financial service providers can evolve in today’s digital landscape, look out for Accion’s Global Advisory Solutions team’s upcoming publication on Demystifying Digital Lending. http://blogs.accion.org/features/rapidly-changing-landscape-digital-lending/
Last year, Amazon grabbed headlines by giving $1 billion in small-business loans to over 20,000 merchants in the United States, Japan, and the U.K. Their near real-time data on sellers’ businesses and access to customer reviews allow Amazon to evaluate customers and manage the risk of lending to small merchants. WeChat also made waves when it entered the game in 2015. As China’s largest social network, it’s been able to deploy more than US$14.7 billion in funds in just two short years. Like Amazon, WeChat benefits from access to data and the ability to offer convenience and efficiency for the customer — it only takes 0.3 seconds to approve a loan application. These tech giants have joined a host of other players in a continually evolving digital lending ecosystem. Other prominent digital lenders include Konfío in Mexico and Kenya-based Kopo Kopo. Each platform in this space leverages technology to offer loans that are faster, more cost-efficient, and more straightforward for the customer. Digital lending is proving to be a potent force for reaching people who haven’t been able to access financial services in the past. Innovative products can overcome the challenges of geography, reduce transaction costs, and increase transparency. But distinct market structures, regulatory environments, and customer needs have led to a wide variety of digital lending models that are each tackling financial inclusion in different ways. When we evaluated the current state of play, we identified seven primary digital lending models: • Online lenders. These lenders offer full end-to-end digital lending products online or via mobile applications. In this model, customer acquisition, loan distribution, and customer engagement are entirely digital. This process is specially designed with no need for face-to-face contact or even for customers to phone a call center. Fintech companies like Lidya, Branch, and Tala are online lenders that help entrepreneurs access funding in emerging markets, including Nigeria, Kenya, and the Philippines. • P2P platforms. P2P platforms are purely digital platforms that match a borrower with an institutional or individual lender and facilitate the digital transaction. The platform typically plays an ongoing central role in the relationship between these parties. In this model, P2P lenders like CreditEase and KwikCash often design the product, score the borrower, and may support repayment and collection processes. • E-commerce and social platforms. These platforms include the likes of Amazon and WeChat. These are digital platforms where credit is not their core business, but they leverage their digital distribution, strong brand, and rich customer data to offer credit products to their customer base. • Marketplace platforms. Marketplaces, like Loan Frame in India, are digital platforms that use proprietary algorithms to match a borrower with the right lender. Lenders typically use these types of platforms to acquire new customers, and they pay an origination fee to the platform. Once funds are dispersed, the customer relationship is direct with the lender. • Supply chain lender. Firms such as Tienda Pago and M-Kopa Solar provide digital short-term working capital loans for microenterprises to purchase inventory from their distributors or for pay-as-you-go financing of an asset purchase. The distribution network enforces repayment through penalties if necessary. For example, suppliers might withhold deliveries of goods or turn off utilities in the case of late payment. • Mobile money lenders. Firms such as Kopo Kopo partner with mobile network operators to offer mobile money loans to their customer base, leveraging mobile phone data for credit scoring. In this model, physical agent networks where customers can go to complete cash-in/ cash-out transactions supplement the digital interface of the mobile phone. • Tech-enabled lenders. These are traditional lenders who have embraced technology to digitize part of their otherwise manual lending process. This digitization could include adding digital acquisition channels or digital repayment options. Tech-enabled lenders like Aye Finance in India and Accion Microfinance Bank in Nigeria, supplement their physical distribution networks with technology — providing a ‘tech and touch’ approach. Adding to the complexity of the digital lending ecosystem is its dynamic nature, which makes strict categorization difficult. Key players continue to test, refine, and evolve their business models and value propositions based on customer needs and market experience. For example, Creditas, a digital lender in Brazil, started solely as a marketplace platform but has subsequently moved into credit scoring, customer engagement, and financing solutions for customers, to become an online lender. JUMO, an online lender in Kenya, started as an end-to-end mobile money lender but is moving away from funding its own portfolio and becoming a marketplace platform. Innovation and market expectations will continue to alter and refine the digital lending landscape. However, the similarities shared by today’s successful models are likely to remain prominent: they digitally source customer data, rely on hundreds, and even thousands, of data points to score customers, offer instant and remote approval, create data-driven mechanisms to drive repayment, and engage customers digitally. Advanced digital lenders have leapfrogged over traditional lenders to provide customers with a faster, more transparent, and convenient service. Traditional banks will have to give customers similar benefits if they hope to compete. To learn more about the ways that digital lending is advancing financial inclusion and how financial service providers can evolve in today’s digital landscape, look out for Accion’s Global Advisory Solutions team’s upcoming publication on Demystifying Digital Lending. http://blogs.accion.org/features/rapidly-changing-landscape-digital-lending/
Fostering responsible loan pricing in microfinance
February 2, 2017
In this third instalment, the spotlight is on the Zimbabwe Microfinance Fund (ZMF), a financial apex body. Brian Zimunhu (BZ), the Fund’s founding managing director talks to NewsDay financial columnist Omen Nyevero Muza (ONM) about the rationale of setting up the ZMF, its evolvement over the years as well as its current challenges and opportunities.
Below are excerpts of the interview.
ONM: What was the rationale of setting up the Zimbabwe Microfinance Fund (ZMF)?
BZ: The ZMF is a financial apex body formed in 2011 with the objective of providing wholesale lending capital to financial service providers (FSPs) such as microfinance institutions (MFIs), microfinance banks, agricultural value chain actors and savings and Credit Co-operative Societies (Saccos) for retailing to micro, small and medium enterprises (MSMEs).
ONM: Which key stakeholders were instrumental in getting the fund up and running?
BZ: The key stakeholders in question include: Zimbabwe Association of Microfinance institutions (Zamfi); development partners such as DFID, Hivos, GIZ and Danida, as well as the Reserve Bank of Zimbabwe (RBZ).
ONM: Please briefly outline the evolution of the fund since inception — its brief history, so to speak.
BZ: The ZMF commenced business in 2012 lending to its partners through a third party financial institution.
ONM: Would you care to disclose the identity of the third party financial institution?
BZ: Of course, this was a “partnership for success” with CBZ Bank. Over the years, ZMF has built adequate internal capacity and all business processes have now been internalised. The fund has since grown from $2 million as of 2012 to $12 million as at end of December 2016. As a revolving fund, ZMF has been able to disburse loans upwards of $17 million from inception to December 2016. This has been achieved through 25 partner FSPs. More than 60% of these loans have gone to women borrowers while an average of 35% has gone to rural clients.
ONM: What sort of borrowers does the ZMF’s lending programmes target?
BZ: The key target audience are financial service providers and value chain actors, who are into developmental lending serving micro, small and medium enterprises that are committed to improving the socio-economic and environmental well-being of the communities they serve.
ONM: What are the ZMF’s sources of funding?
BZ: Donated equity from social/development investors and debt financing.
ONM: Please outline the interest rates and fees that the ZMF charges for its loans.
BZ: Our interest rates are in the range of 7-13% per annum and we charge establishment fees of up to 3% of loan amount.
ONM: What are your key considerations in determining this interest rate and fee structure?
BZ: The fund considers the risk profile of partner financial service providers, the cost of capital, area of funds deployment and use of funds. Benchmarking against market rates is also a key consideration.
ONM: By area of funds deployment, do you mean physical location or sector? Please explain.
BZ: I mean physical location and indeed there is need to clarify this. So, as a fund, we are very clear and alive to the fact that, while financial exclusion is most rampant in rural areas, servicing clients from those locations is both more expensive and highly risky. As a way of incentivising and cushioning FSPs extending the boundaries of financial inclusion by serving the rural and supposedly risky clients, ZMF tends to lean to the lower end of the interest rate band.
ONM: What was the fund’s exposure like in sectoral terms at the end of 2016?
BZ: As of end of 2016, the fund had a total exposure of $10m to the following sectors: distribution (62%), agriculture (29%), manufacturing (4%), services (3%) and other (2%).
ONM: What would you say have been the key impacts of your funding interventions on the target market?
BZ: Among the key impacts of our funding are growth in enterprise lending as opposed to mere consumer lending among the ZMF partners, improved operational self-sufficiency among partner financial service providers and increased rural reach and access to finance by women. We are also fostering responsible loan pricing and have sparked growing interest from offshore funders. ZMF alone may never be able to meet the ever-increasing funding needs of the sector and funding from offshore sources will help in keeping the country’s MSMEs oiled but also shoring up the levels of the much-needed foreign direct investments.
ONM: Having been operational for close to five years, what would you say have been the ZMF’s key constraints?
BZ: At inception, the challenge was slow uptake of funds as FSPs lacked immediate capacity to handle big loans from the fund; interestingly, the challenge now has become limited funding in the face of increasing demand for loans by partner FSPs. The challenging economic environment, which has significantly increased the level of inherent credit risk, is another key constraint.
ONM: And opportunities? There must be some opportunities.
BZ: There are several opportunities, including national recognition of microfinance as a key pillar of the national financial inclusion strategy. The initiatives by the RBZ and other development partners to build strong financial infrastructure such as the credit and collateral registry will go a long way in enhancing risk management and promoting financial inclusion. There are opportunities for funding climate smart technologies to help microenterprises and households cope with or mitigate the effects of climate change. We also see increasing demands for loans and increased absorption capacity amongst our existing clients.
ONM: Since the ZMF is licensed as credit-only MFI with capacity to do retail loans, have you ever considered going that route?
BZ: ZMF’s business model is to reach out and positively impact on as many Bottom of the pyramid (BoP) clients as possible working through partner FSPs and value chain actors. Direct lending to retail clients is not part of our current strategy.
Business herald: 11 APR, 2018 – 00:04 Dr Sanderson Abel Financial institutions play a pivotal role in the granting of credit to the various sectors of the economy.
A bank is just like a heart in the economic structure and the capital it provides is like blood in it. As long as blood is in circulation the organs will remain sound and healthy.
If the blood is not supplied to any organ then that part would become useless, so if the finance is not provided to any economic sector, it will be destroyed.
The availability of credit is important in every economy since households and firms are not in a position to generate enough resources on their own. Credit, which is the pivot for financing of business enterprise serves as an essential, facilitating agency in the primary economic functions of production, exchange, consumption and distribution.
In its simplest sense finance refers to those activities involved in seeing that an individual or organisation has the resources with which to pay its bills promptly
In their endeavour to provide funding to the various sector of the economy, banks develop various products to suit their customer needs. It is important for bank clients to understand these various products so that they approach their various banks with the knowledge of the type of product they require for them to derive maximum value from the credit products provided.
There are different types of financing that you can choose depending with the agreement with your bankers. For example, in acquiring business equipment, fixtures and fittings, you can choose to finance the acquisitions through an industrial hire purchase, leasing or a term loan. Some of the credit products offered by the banking sector are discussed below.
Term Financing: This type of loan is availed by the borrower to acquire fixed assets (immovable properties i.e. land and buildings and vehicles for commercial use). The loan carries a predetermined length of time (tenure), with repayments done in instalments.
Lease Financing: This type of facility helps the borrowers to acquire equipment’s and machineries for their businesses on lease. This type of finance is long Term in nature and as such, the repayment is made in instalments.
Overdraft (OD): This is a short term facility which is granted to the borrower to enable him meeting his day to day funding needs; like payment of salaries, utilities and purchases of inventories etc. An agreed limit is sanctioned by the bank and the borrower is allowed to draw that amount through his current account.
Revolving Credit: This type of loan is also short-term in nature and is used to meet short-term funding requirements of the borrowers. This type of loan does not have a fixed number of payments, as in the case of instalment loan.
Cash Finance and Running Finance are types of revolving loans. Once the loan limit is approved, then the borrower is free to withdraw amounts to the extent of that limit. The borrower can withdraw and repay the amount as many times as he wishes to; but he has to pay mark-up on the amount which he has actually used.
Letter of Credit (LC) or Documentary Credit (DC): Letter of Credit is a written undertaking by a financial institution in favour of the supplier/seller to pay him the amount of imported/purchased goods, in case the actual importer/buyer fails to pay
Unsecured financing: Unsecured loans are those where the banks do not demand tangible securities such as land, building, fixed/current assets, tradeable inventory etc. as security; whereas, in secured financing, the banks demand any of the security as mentioned above. Secured financing is also called collateralised financing.
Credit provision by the banks to their clients through the various channels outlined above gives an obligation towards the borrower to dutifully service the obligation.
Failure to honour that obligation will disturb the whole credit system leading to reduced resources to other potential borrowers. In other words, the potential funding by the banking system is seriously reduced. Resultantly, the problem of credit impairment drags on the economy in the following ways: disintermediation of bank-system lending caused by the erosion of banks’ profitability; stagnation of economic resources, such as labour and capital, in fields with low productivity and cautious behaviour of corporations and consumers due to a decline in confidence in the financial system.
It is now an indisputable fact that economies are dependent on their growth and development on the provision of credit by the financial sector. Corporates, individual and other players provide credit to one another with the banks lying at the centre of the system. A cycle of credit is thus created in an economy where each economic agent is one way or the other in receipt of credit from another directly or indirectly. Any hiccup within the cycle might end up disturbing the smooth flow of resources among the economic agents.
On a broader macroeconomic level, this would translate to economic stagnation as some sectors become grappled with working capital and capital challenges as they fail to access loans and overdrafts from the banks while those who access the resources fail to repay as a consequence of the high cost of the funds.
Dr Sanderson Abel is an Economist. He writes in his capacity as Senior Economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on abel@baz.org.zw or on numbers 04-744686 and 0772463008.
The Monthly Financial Sector Bulletin (MFSB) recently introduced “The Microfinance Interview”, a monthly question-and-answer feature through which it engages with key stakeholders of the sector such as microfinancial institutions (MFIs), funders, service providers, development partners and regulators amongst others on issues of topical and mutual interest.
In the first interview, NewsDay’s financial columnist and editor of the MFSB Omen Nyevero Muza (ONM) caught up with Cameron Goldie-Scotie (CGS), the chief executive officer of Musoni Services, a Netherlands-based provider of a core-banking system used by 17 financial organisations in Zimbabwe, and discussed their current work and plans in the country.
ONM: What’s Musoni System and who is behind it?
CGS: Musoni is a multi-award winning core-banking system used by more than 75 organisations in 14 countries around the world. The software has been consistently proven to help financial organisations improve efficiency, reduce costs, and expand outreach into the rural areas where the majority of the unbanked live. Musoni Services is a Dutch company based in Amsterdam. Before starting Musoni Services, the team founded the world’s first 100% mobile microfinance institution in the world in Kenya in 2009, now serving over 40 000 clients.
As a result, we have first-hand knowledge of what it’s like to run a microfinance organisation and challenges faced in finding the perfect core banking system.
ONM: For a system that is from the Netherlands, what’s the origin of the name Musoni, a word which also exists in the Shona language in Zimbabwe?
CGS: Musoni stands for ‘Mobile Usoni’, which means “mobile future” in Swahili. We like to think that our use of technology represents the future of microfinance, and we take our clients on a technology journey.
ONM: What types of organisations are using this service in Zimbabwe and how many are they currently? What’s the international profile of the product like?
CGS: We currently work with 17 financial organisations in Zimbabwe, ranging from young companies just starting out, to more established organisations like Microking (now Microcred), Virl, Inclusive Financial Services, First Choice and many others. Globally we work with over 75 organisations across 14 different countries, the majority in sub-Saharan Africa.
ONM: How long has the system been in Zimbabwe and have you established any partnerships yet?
CGS: We first started working in Zimbabwe in early 2014 and after an extensive request for proposals process, we were selected as the first preferred and recommended software provider by Zimbabwe Association of Microfinance Institutions (Zamfi). We also work with the Reserve Bank of Zimbabwe, mainly through the Financial Inclusion Thematic Working Groups such as the Microfinance Thematic Working Group.
Aside from that, from a technical perspective, we have integrated with local players such as EcoCash and PayNet, enabling MFIs to process SMS campaign messages such as payment reminders across all the mobile networks.
ONM: What challenges have you faced trying to penetrate the Zimbabwean market to service MFIs?
CGS: The Zimbabwean market is obviously challenging, as MFIs have less access to external debt financing than we see in other markets. This, of course, makes it harder for them to grow quickly at a sustainable rate. All the same, I believe this is where technology can make a real difference.
Using mobile money, tablet apps and credit scoring makes it more affordable to grow client numbers in previously hard-to-reach areas and we believe we can help MFIs to stay competitive and expand financial inclusion.
ONM: What would you say are your opportunities in relation to Zimbabwe?
CGS: A large proportion of the population still has no access to financial services. We are a social impact company first and foremost; so, improving access to financial inclusion is a core goal for us.
This is also a huge opportunity for Zimbabwean MFIs and those using technology like Musoni system will stand the best chance of growing rapidly in the coming years. We’re also excited and privileged to work with both Zamfi and the Reserve Bank of Zimbabwe.
ONM: We understand that you have just released the latest edition of Musoni System. What makes it different from the previous version?
CGS: We continuously work on enhancing the functionality of our system through feedback from our clients, potential clients and ongoing research.
To this end, we have just released the latest version of the Musoni System. We have added a lot of really exciting new functionality, including a custom report builder, the ability to build custom document templates (like loan contracts), send emails to clients and much more.
ONM: There are several management information systems on offer in Zimbabwe for MFIs. What’s Musoni’s unique selling proposition?
CGS: We’re the only provider that offers the full suite of technology to all our MFIs, including EcoCash integration, the SMS module, the tablet application, credit scoring and more.
Most providers offer just a core banking system and force the MFI to integrate with other vendors or pay more for additional features. We include it all as standard functionality, making it easier than ever for organisations to start benefiting straight out of the box.
ONM: We understand the Musoni System is a winner of an international award? Can you tell us about this award in terms of who conferred it and what’s it for?
CGS: Yes! We recently won the BBVA Financial Inclusion Special Award in recognition for our work in improving both the quality and availability of financial services around the world. The award was judged by a panel including judges from Bill and Melinda Gates Foundation, BBVA and the IIF Conference.
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Potential Goat market: Muslims demand two million goats
September 19, 2016
This was revealed at a stakeholders workshop held last Saturday by the Farmers Economic Growth (FEG) Trust.
Muslims consume goat meat at various festivals that include the just
ended Hajj, which is a five-day religious pilgrimage to Mecca and holy
sites in Saudi Arabia. According to the ‘Hajj, the Islamic pilgrimage to
Mecca explained for non-Muslims’, all Muslims who are physically and
financially able must embark on this pilgrimage at least once in their
lives.
On the last three days of the Hajj, Muslims celebrate Eid al-Adha, or
the Festival of Sacrifice, to commemorate Prophet Ibrahim, who almost
sacrificed his son Ismail for Allah.
Another major festival is the Eid al Fitr, a three day celebration to mark the holy month of Ramadan.
lt has been difficult to satisfy these markets as local goat breeding is mainly done on a subsistence scale.
According to a livestock officer in the Ministry of Agriculture,
Mechanisation and Irrigation Development’s Department of Livestock
Production and Veterinary Services, Mr Daniel Kampiyou, 95 percent of
the goat population in Zimbabwe is in the rural areas where farmers
breed goats for their own consumption.
Mr Kampiyou said the goat industry needs to go on an organised commercial scale to be able to supply the Muslim community.
The FEG Trust’s treasurer, Mr Albert Manhanzva said farmers failed to supply two million goats for Muslims in the Middle East.
“This time of the year, the Muslim community have agencies all over
in goat producing areas where they are buying goats for their festivals
and we are failing to meet that demand here in Zimbabwe.
“Countries like Iran and other Arab nations have approached us
seeking two million goats. The main driving force for this trust is to
improve production,” Mr Manhanzva said.
According to FAOSTAT (2008), Africa is the second largest producer of goat meat in the world after Asia.
Zimbabwe is nowhere near the top ten producers of goat meat. A
Zimstats report (2012) revealed that Zimbabwe holds only 1,62 percent of
the goat population in Africa.
A member of the FEG Trust who is also a farmer, Ms Mirirai Dizha said
it is disturbing to note that there is a readily available market which
is not being satisfied.
“The Muslims are always approaching us for the goat meat but we can’t
supply. Most of the farmers who are scattered across the country’s
rural areas keep the goats on a subsistence scale.
“We need to move from subsistence to commercialising the goats. The
market is there, what isn’t there is the goat farmer,” she said.
By end of this year, farmers under the association are targeting to breed at least 100 female goats each.
THE Zimbabwe Microfinance Wholesale Facility Trust (ZMWWFT) targets
to grow cumulative loan disbursement to microfinance institutions to
about $12 million this year from $6.7 million in 2014.ZMWFFT manager
Brian Zimunhu told Business Chronicle yesterday that it projects an
incremental portfolio of $6 million this year.
“According to our projections, we’re looking forward to growing our
loan books to cumulative disbursement around $12 million. The
incremental portfolio is likely to be $6 million. This is due to the
huge appetite for money as MFIs continue to re-apply for funding,” ZMWFT
said Zimunhu.
“As at December 31, 2014, our outstanding loan portfolio stood at
$4.72 million and this year our target now is to grow the cumulative
figure. Between 2012 and December 31 last year, we had cumulative
disbursement of $6.7 million against approval disbursement of $7.5
million.”
Over the years, the trust has disbursed on-lending funding to 18 MFIs
dotted across different parts of the country with interest rates
ranging between eight percent and 13 percent per annum.
“In terms of the defaulting rate, defaulters aren’t in the majority. Very few MFIs are struggling to repay the loan.”
At its inception in 2012, the facility disbursed $1 million and a further $1.3 million in 2013.
ZMWFT has disbursed loans from a minimum of $15,000 to a maximum of
$1 million and intends to continue growing its loan limits depending on
the facility’s capitalisation levels.
The fund started operations with a capital base of $3.2 million.
Meanwhile, the Reserve Bank of Zimbabwe has issued a circular to
money lenders and credit-only MFIs providing clarity on permissible
sources of raising funds.
“These include shareholders’ funds (paid up share capital and
reserves), internal sources such as retained earnings, fees, commissions
and interest income; grants or donations from government and its
nominated agencies, including ministries seeking to promote
microfinance, wholesale/revolving funds including funding from
development partners and non-governmental organisations . . .” reads
part of the circular.
RBZ has said funding from international sources should comply with relevant exchange control laws and regulations.
“Moneylenders and credit-only microfinance institutions are
prohibited from issuing any negotiable or non-negotiable instruments
except ordinary shares.
“Moneylenders and credit-only microfinance institutions may, however,
issue debentures, only to the extent permitted in terms of section 33
(1) (c) of the Companies’ Act [Chapter 24:03], that is, to members only.
Regulatory approval will be required prior to issuing debentures,” said
the Central Bank.
The Zimbabwe Micro-finance Wholesale Facility has disbursed loans
worth at least US$2,5 million to micro-finance institutions for
on-lending to small businesses and economically active poor since last
year.The facility is an apex fund set up to provide wholesale funding to
individuals and businesses. It aims to reduce poverty and create
employment by increasing access to financial services for women and poor
people, while fostering sustainability.
It is supported by various development partners including Hivos of
the Netherlands, the UK Department for International Development and
German Agency for International Co-operation.
ZMWF Trust chairperson Dr Leonard Tsumba told participants at a
stakeholder meeting that at least 11 MFIs had benefited from the fund so
far.
“Since operations began in January 2012, loans worth US$2 469 100 have
been approved. About 66 percent of the end beneficiaries of those funds
are women. This is clearly in line with the ZMWF goal of reaching out to
the economically active poor, especially women” he said.
Dr Tsumba, however, said there was need to strengthen the financial
and technical capacity of MFIs in the country to effectively serve their
target market. He said it was also crucial that MFIs spread their
services to marginalised areas of the country.
“I urge our MFIs to take advantage of the wholesale facility, which
is meant to assist you, in your efforts to offer inclusive financial
services to the economically active members of our society,” he said.
The ZMFW has four lending windows namely rescue capital,
stabilisation capital, as well as growth and innovation capital loans
which eligible registered MFIs can borrow.
Apart from loan capital, the fund has small grants to build the
capacity and expertise of MFIs in credit management, operational and
financial management skills. Other non-financial services that the fund
offers include women empowerment as well as gender and HIV and Aids
programmes aimed at alleviating poverty. – New Ziana.
