POSB targets SMEs

The People’s Own Savings Bank (POSB) said last week it is directing the bulk of its loans towards the small to medium enterprises (SMEs) as parts of its efforts to support the growing informal sector. With Zimbabwe’s formal sector shrinking due to economic challenges, SMEs have become the face of the economy employing thousands. Most of the country’s financial institutions stand accused of shunning the informal sector by failing to extend credit to them as well as encouraging them to use formal banking services.

POSB, one of the few profitable Government owned entities, recently declared a $313 000 dividend to its sole shareholder, while committing continued support to the productive sectors of the economy.

The bank’s head of credit and retail, Mr Mankulaipe Banda said at least 55 percent of the bank loans had been extended to SMEs, which had over time become a strategic segment of the economy. “Provision of funding to informal sector remains elusive but would encourage other financial institutions to change their operating models,” said Mr Banda.

“At least 55 percent of POSB loans are extended to SMEs who have become the cornerstone of the economy and it’s now strategic for more banks to engage with the sector,” he said.

Mr Banda said the financial institution would continue to establish strategic partnership as well as source more lines of credit for the SMEs.

POSB, which operates 34 branches across the country, posted a $1,25 million profit last year.

Established in 1904, the bank whose major account holders are low income clients, estimates its market share at 20 percent. – New Ziana.