CBZ Bank — Zimbabwe’s biggest bank by assets and deposits — last week hosted the inaugural two-day CBZ SME International Indaba in Bulawayo. The Sunday Mail Business Reporter Livingstone Marufu talked to CBZ group CEO Mr Never Nyemudzo to get an appreciation on how the bank hopes to grow SMEs and young entrepreneurs.
Q: The Youth Empowerment Programme seemed to target urban centres. How will it help the marginalised rural youths?
A: This youth programme, YEP, was quite a popular programme since we launched it last year, culminating in the awards last month. We strongly believe that youths must be given opportunities, especially those with the right ideas and desire to change their circumstances in terms of business opportunities.
We want to make sure that it’s a yearly event and, unfortunately, I don’t have the budget now, but what we really feel (we have to do) this time around is to reach deeper into the rural areas.
Last time we launched it, we may have restricted ourselves to urban, peri-urban centres and growth points.
We want to ensure that there is that person with a good idea but never imagined that someone is going to help them.
Q: Is the CBZ SME International Indaba going to be an annual event, and how is it going to help SMEs?
A: This is going to be a yearly event and I can assure you that we are getting on board more partners to make it bigger, more informative and more helpful.
We will host it every March here in Bulawayo, and I am taking this opportunity to invite corporates who are interested in helping SMEs.
Q: But are you as a bank prepared to work with other financial institutions for the good of the sector?
A: It is not about being where money is that matters, but it’s about knowing how it moves, why it is moving and where it is moving and for what reason? That’s why as CBZ we are more than happy to work with other banks because we believe that in certain issues like SMEs we must collaborate more than we must compete.
Here, at this Indaba, there are about three banks that are exhibiting because our objective as banks is to ensure that we increase our reach, our common cause of reaching to the idea in somebody’s head that can turn around things for him or her or his family and surroundings so that one can create jobs and generally alleviate poverty. We are certainly going to invite more banks for the second round of the Indaba.
Q: The bank seems to be directing its efforts to towns and seem not to reach rural areas . . .
A: CBZ has 66 branches nationwide, but because of technology, the issue of brick-and-mortar branches is getting less and less popular. So on top of those branches we have invited 2 500 agencies. These are your shops, schools, hospitals, which means these institutions are among the people out there — where banks can’t reach — where you one can deposit and withdraw cash.
Technology has come in handy. Technology is no longer the place you go: it is something you do, it’s now a lifestyle. People are no longer worried about the time banks close as we have invested in technology to ensure that our clients can get services in a way that fits in their lifestyle.
And with the CBZ Touch, our clients are able to transact anytime and anywhere in the world for whatever good reason that they want to transact.
Turning to the brick-and-mortar, we are fairly spread as we have branches in Tsholotsho, Victoria Falls, Gwanda, Beitbridge, Zvishavane, Gweru, and here in Bulawayo there are five branches.
Q: How much money has CBZ invested in the SME sector this year?
A: Since dollarisation, we have invested in excess of US$150 million in SMEs largely through loans and (a) small portion through training and capacity building.
I am a strong believer of SMEs and I am happy to say that the portion that has been given as loans has been very impressive, and of our total loan book, we have given SMEs US$36 million.
We want to launch more lines of credit so that we continue to grow that sector.
Given that we have had YEP recently, we want to launch a Youth SME programme.
Q: In the 2017 Monetary Policy Statement, RBZ Governor Dr John Mangudya implored bank to cut lending rates to around 12 percent. What are your lending rates to the SMEs sector?
A: I firmly believe that affordable financial products create a big pool for banks. Lending is never a margin game but a volume game. You need to lend to as many people as possible at a reasonable price so that you continue getting your income. We strongly agree with the apex bank on the 12 percent rate, but already our minimum lending rates are already at six percent. However, these are rates for our top profile clients.
In order to grow SMEs, we should have the right financing and that’s the reason why we continue working with developmental agencies like CARE and ZADT, which focus on small players in the agriculture sector. They have interest rates of 4,5 percent, but overall lending rates of CBZ are at 12 percent, which is in line with the RBZ requirements.
Q: What are you doing to ensure non-performing loans are kept low?
A: Sometime back, when we serviced SMEs, we saw that the default rate was a bit high and then we realised that we gave money to people who did not have a passion for what they were doing. We came up with training to gauge the enthusiasm for the business idea for which the loan is required; as soon as we adopted that, we started lending to people who can give everything to protect the business idea. As a result, default rates have dropped.
Q: How will the Moveable Property Bill help the SME sector given that most small businesses have no fixed collateral?
A: Certainly that Bill will go a long way in helping the SME sector, as, at the moment, they are some people who cede their car to bank A as collateral and again do the same to bank Y.
Once this Bill is put in place, it will safeguard against such abuses. It is going to bring some sanity in terms of using moveable assets as collateral, so we are eagerly waiting for that Bill to go through.