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Pardon Gotora Urban Scape
The world is dynamic, but of concern is the realisation that our banking system remains rigid regarding financing housing development.
The banking sector has moved with time on digitalisation and ancillary chores, but the actual housing finance modelling has remained static and rigid.
This is one sector that remains a preserve for the elites, highly risk averse and hiding in a comfort zone somewhere in the economy.
Allow me to express myself as a layman, given that I am not a financial expert, but I can count a few notes in my wallet and competent enough to accurately interpret a debit and a credit on my bank statement and do a few reconciliations and where figures do not add up, I go back to the enquires desk in the bank.
In the past, we used to have clothing retailers or home furniture shops utilising credit facilities such as zero-deposit accounts, lay-bys and hire purchases.
The money would be deducted at source with a stipulated repayment period. The major beneficiaries of such arrangements were those formally employed.
Shops required payslips, bank statements, proof of residence and copy of identification documents. Those in the informal sectors benefited from lay-bys.
In the financial system, people accessed mortgage financing to buy houses with a repayment period stretching up to 25 years.
Even non-mortgage salary based loans were also issued to the formally employed.
I stand guided, but in my opinion, the bulk of the borrowers, even from the clothing and furniture shops, were civil servants and employees from big corporates and State enterprises.
Nobody bothered to analyse the trend with high end market because the system was taking care of that stratum.
In this instance, the focus is on the lower echelon.
However, the obtaining macro-economic environment has not been favourable to all sectors, the lending sector is not spared.
Neither has it spared the ordinary citizen whose primary dream is to buy an immovable property.
The price tag attached to such dream properties cannot be paid once off by the majority of the people in need.
More people are now in the informal sector and the resettlement areas as new farmers.
Farming, for instance, is seasonal and most of the farmers rely on rain-fed cropping and livestock. Drought has not had empathy in the past few seasons, a direct culmination of the adverse effects of climate change.
The livestock has been ravaged by incurable diseases such as theileriosis (January disease) that has wreaked havoc.
Unfortunately, as things stand, civil servants do not qualify for any mortgage financing from any institution.
Few are still accessing salary-based consumption loans or to raise fees to pursue studies for career development.
This is a micro-finance facility similar to the ones offered by micro-finance institutions with no collateral pledge.
None has been extended to purchase a stand or house because they simply cannot afford the cost of money or even meet the minimum entry requirements captured in the small print of the application form.
Consequently, we now have a “dysfunctional” mortgage system, yet all the infrastructure and expertise is in abundance.
There is an old adage which says “a friend in need is a friend indeed”. The low income earners are in dire need, but their purported friend is shunning them when needed most.
The public has lost confidence in the banking system, but they need banking services like mortgage financing.
It then becomes a chicken and egg debate. How do you recover the lost faith in the banking system?
I understand banks and building societies lend depositors money as an investment to grow it. The banking public have not received any interest on their bank balances for ages now.
Instead, there are bank charges that actually chew into the savings. There was a time when people were urged to invest in paid up permanent shares (PUPS), which was an innovative idea to promote savings and enhance lending.
The depositor lost out in the equation. To make matters worse, the banks and building societies have “diversified” and ventured into real estate development.
They have construction arms involved in direct servicing of land and sale through “mortgage” facilities. This has helped to elbow out private land developers who wish to access lines of credit from them to raise capital for housing projects.
This has also crowded out the ordinary client as the banks and building societies try to recover cost of construction and margin, and cost of money and margin.
The total costs are lumped up in one price of a unit beyond the reach of many. The target beneficiary loses out and some properties have remained unoccupied or bought by those buying for investment purposes.
The matter also calls on Government, particularly Treasury and the Reserve Bank of Zimbabwe, to up the ante in terms of fiscal and monetary policies that bring macro-economic stability.
The Covid-19 pandemic has exacerbated the situation as well and now there is a global competing demand with regards public health.
But in the meantime, can we fold our hands and wait for the economic restructuring to take shape? Can we really admit that all the best brains in the financial sector have run short of ideas to capture the working class in their current state, the informal sector and the new farmers?
Have there been efforts to converse about the issue and come up with a win-win solution?
Maybe the financial sector is comfortable dealing with the minority affluent at the expense of the majority low earners.
Online Reporter