Online Reporter
Business Reporter
Old Mutual Finance has come up with an innovative micro-lending facility designed to bypass traditional banking bottlenecks and provide funding to upscale women-owned small enterprises.
The collateral-free, fast-tracked credit facility aims to dismantle longstanding barriers that have choked the growth of the country’s highly informalised micro, small and medium enterprises (MSMEs) sector.
Presenting details of the facility during an Old Mutual women’s breakfast meeting in Harare on Thursday, client relations officer Ms Anesu Murenje said that the facility explicitly targets the core pain points that usually lock small-scale women entrepreneurs out of the formal banking grid.
The expansion of local small businesses is often heavily stifled by prohibitive lending rates, rigid collateral demands and complex underwriting processes.
With Zimbabwe’s economy heavily informalised, business lobby groups have persistently mounted calls for financial institutions to innovate beyond traditional risk frameworks.
Ms Murenje said Old Mutual’s new intervention responds directly to the calls by waiving security requirements for funding.
“The loan facility waives collateral and guarantors, enabling women to access capital based on the viability of their enterprises rather than physical assets,” Ms Murenje said.
The loan limit is US$5 000 and carries an interest rate of 8 percent per month, calculated on a reducing balance basis, with a standard repayment tenure of six months.
As one makes monthly repayments and the remaining balance drops, the actual amount of interest drops too.
“Those wishing to borrow more than US$5 000 will need to pledge security,” she said.
In recognition of seasonal market fluctuations, grace periods for repayments are granted depending entirely on the unique nature of the borrower’s business cycle.
To match the fast-moving pace of informal trade, successfully processed loans can be accessed within three to five days.
Applicants do not need to hold an account with CABS, the banking subsidiary of Old Mutual, to be eligible for funding.
Rather than demanding complex corporate financial statements, Old Mutual is leaning heavily on basic Know Your Customer (KYC) principles and raw transaction histories to assess creditworthiness.
Entrepreneurs are simply required to provide basic business records, such as daily transaction receipts, to demonstrate operational activity.
Market analysts have welcomed the move, noting that by swapping hard asset requirements for transactional tracking, the facility could provide the necessary catalyst to upscale women-led informal ventures into sustainable, growth-oriented enterprises.
Attendees at the meeting highlighted high interest rates, rigid repayment schedules at variance with trading cycles and a lack of hard assets for collateral as the biggest barriers to securing formal credit.
