EDITORIAL COMMENT: New bank must offer services that uplift women, youths

The face of female and youth-led business in the country will never be the same again following the commencement of operations by a financial institution geared to exclusively attend to the two demographic groups’ financial needs.

President Emmerson Mnangagwa commissioned the Zimbabwe Women’s Microfinance Bank in Harare on Monday.  The bank will serve women and youths only, supporting their business ventures with loans.

The bank, which was supposed to start operating last year, is significant in more ways than to its focus on women and youth business – it is the first such financial institution in Sadc, and possibly one of the few on the continent.

Because of tradition that suppressed women and regarded them as perpetual minors always under the wings of their husband or male relatives, women are generally excluded from the financial system.

It is challenging for them, and youths as well, to secure financial assistance from the conventional banking system as most of them lack collateral security.

Without such critical security to back up their loan applications, women and youths have tended to rely on short term loans that are typically costly and come in small amounts. Short term, costly and small loans aren’t ideal for any serious business but longer term, affordable and larger loans. Thus the new bank is geared to fill that gap.

“The bank will therefore, seek to champion women’s financial inclusion through availing  affordable funding options to start their own enterprise,” said the President.

“However, as we establish banks like this one, I exhort all players in the financial service sector to make numerous efforts to restore depositors’ confidence as well as develop and offer packages that are in sync with the type of business and personal needs of our society.  I further encourage the sector to resist temptation of towards exploitative tendencies such as exorbitant bank charges and levies, which in the long term dwindles the market confidence and scares depositors away. The setting up of the Women’s Bank is consistent with the provisions of our constitution in promoting inclusivity of women and gender mainstreaming in all developmental programmes in our nation.

“What makes the entry of the bank into the financial services market significant and even more exciting is that it is the first of its kind in the Sadc region.

Zimbabwe is therefore a torch bearer in this regard. Women in Zimbabwe have acquitted themselves exceptionally well over the last two decades when the nation was confronted by a myriad of challenges which threatened its social fabric.

“Women are the pillars of our families who at times do various jobs to support and sustain families. My Government has made it a priority to ensure that women are supported to participate in mainline economic activities by availing tailor made support facilities for their financial inclusion. We are fully cognisant of the reality that sustainable economic development can only be achieved through the full participation and collective economic strength of all citizens including women and the youths.”

Women and youths are obviously delighted that the Government has decided to operationalise the bank. We look forward to it helping in uplifting the social and economic status of women and young businesspeople.  The development path that the country has taken, particularly after November 2017, is one that must be walked by all – women, youths and men.

But for that to happen the new bank must take an approach that is different from conventional financial institutions and micro-financial institutions in particular.  Management needs to realise that they lead a unique organisation, meant to attend to a unique client whose needs, aspirations and socio-economic conditions are equally unique.  Their products must therefore be able to speak to those non-to-common circumstances.

One critical point to be made is that interest rates that the bank will levy on loans should be affordable. The powers that be need to realise that their target market are among the most marginalised peoples in the country, who are trying to build something out of nothing.  Therefore, if they are made to pay extortionate interest rates, the bank will fail to deliver on its mandate.  That would be unfortunate.

A loan at an affordable interest rate amounts to nothing if it is given to someone who lacks technical know-how to run a successful business. A fuller package would mean that, in addition to making available long term loans, in the right amounts and at affordable interest rates, borrowers would receive thorough training in how to run a business. They can be assisted to choose the right industries to invest in as well. Not everyone must rear chickens or run a soap-making enterprise. There must be other areas that are just as rewarding, or more, than poultry and soap-making.

Physical access to banks has presented challenges to potential clients and the banks themselves. Many are based in towns and a few nearer to where the people live, especially in rural areas. The bosses at the Zimbabwe Women’s Microfinance Bank might want to achieve a geographical reach as that which the POSB boasts of. In cases where circumstances don’t allow that decentralisation, the bank could open up agencies down to district centres so that more women and youths can access services.