CBZ Holdings Turns to SMEs
CBZ Holdings Limited is taking advantage of transitional opportunities in the small to medium enterprise (SME) sector to unlock shareholder value.
SMEs are contributing an estimated 50 percent of the country's gross domestic product, with Finance Minister Patrick Chinamasa describing them in his 2015 National Budget as the "new economy".The SME sector has become the bedrock of the Zimbabwean economy in providing employment in the wake of the shrinking formal sector.
It is said that much of the country's cash is now circulating in the informal sector, hence current attempts by government to integrate this sector into mainstream banking through the National Financial Inclusion Strategy.
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| CBZ Holdings Turns to SMEs |
CBZ's non-banking assets are currently at 15 percent, an improvement from nine percent in 2014.
"The market continues to experience liquidity shortages, high credit risk and growing informalisation of the economy and our response as CBZ Holding is that we will create a market to take advantage of transitional opportunities in the SME sector," said Nyemudzo, speaking at the group's annual general (AGM) meeting last week.
Early this year, the Zimbabwe Association of Microfinance Institution said SMEs require strategic guidance and financial support to play a bigger and effective role in driving the economy.
While there is enormous upside potential in the SME sector, banks have been called upon to be vigilant in granting credit in order to break the vicious cycle of non-performing loans, which nearly crippled the sector.
After a number of banks collapsed due to a combination of factors, including spiralling non-performing loans, the Reserve Bank of Zimbabwe (RBZ) had to be creative in order to break the chain of bank failures.
The RBZ's response has been in the form of the Zimbabwe Asset Management Corporation which has been acquiring non-performing loans, which have the potential of being salvaged.
The country's largest financial services group said it would step up efforts to collect bad debts, and will adopt "strict credit granting and closer monitoring of borrower performance" to avoid losses.
"We will continue with a cautious approach to lending with our loan book growing by two percentage points to US$1,6 million," he said.
Despite the prevailing economic challenges, CBZ registered revenue of US$37,3 million during the first quarter of the year and a profit after tax of US$5 million.
Total assets grew by 5,2 percent to US$2,1 billion supported by growth in deposits that grew by 5,5 percent to US1,8 billion during the period under review.
Active accounts improved from 218 000 during the first quarter of last year to 250 000.
The number of transactions grew by 21 percent from US$3,4 million to US$4,2 million.
Nyemudzo said innovation was going to be at the core of the group's strategy in order to support customer retention and acquisition.
"We will promote innovation and strengthening of synergies. The group launched the first mobile integrated app in the country which is supported by a 24/7 call centre," he said.
As far as the insurance and assurance businesses are concerned, the group believes that responsiveness to obligations as far as clients are concerned would continue to guide the business.
Innovation and product development is also expected to drive growth and value.
The group registered a 43 percent growth in the number of policies to 115 000 in the quarter under review.
The AGM was the last to be chaired by Richard Wilde, who retired from CBZ after being with the institution for the past 18 years, having joined the group in 1998.
He will be replaced by Elliot Mugamu.
Wilde said he was happy to leave the group in a solid condition.
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