Zim mulls youth bank

HARARE - Zimbabwe is working towards establishing a bank that will represent youth interests in the country’s financial sector as well as provide credit to upstarts and small to medium enterprises.

Finance minister Patrick Chinamasa said he made a provision for establishment of a youth bank in this year’s budget.

“Treasury has announced in the 2017 Budget provision of seed capital for the establishment of a youth bank to be known as Empower Bank,” he said, adding that his ministry had also provided capital for the establishment of the long-awaited Women’s Micro-Finance Institution (MFI).

Chinamasa allocated $2 million for capitalisation and transformation of the Small and Medium Enterprises Development Corporation into a micro-finance bank.

Market experts, however, warned that resources at the youth bank could be misappropriated by senior Zanu PF officials.

This follows a dismal failure of several youth empowerment projects after the brazen looting of 2012’s Kurera-Ukondla Youth Fund, which was reportedly used by Zanu PF as its campaign for the 2013 elections.

The latest move also comes at a time the central bank has launched a financial inclusion strategy to cater for the previously marginalised and unbanked population.

Chinamasa noted that credit to youths was practically nonexistent at the moment.

“Zimbabwe seeks to unlock economic opportunities, especially for women and youths by expanding access to savings, credit, insurance, capital markets and payment systems.

“It is, therefore, critical for women and youths to have access to the full range of financial products and services, including credit, savings and microfinance which are essential to fully develop their productive assets to facilitate graduation of their income generating activities from survival level into viable businesses,” he said.

While government has attempted to assist youths through loan provision, the path has not proved fruitful with efforts marred by corruption and poor administration of funds which were mostly distributed along partisan lines.

In 2015, government claimed it had tightened screws on a new $10 million loan facility for youth start-up projects after high defaults registered in an initial facility drove Non-Performing Loans (NPLs) for the country’s largest mortgage lender.

Given these circumstances, market watchers contend that government needs to be stricter at the Empower Bank for the institution to achieve its intended purpose.

The building society arm of insurance giant Old Mutual, Central African Building Society in 2014 suspended disbursements from its

$10 million Youth Fund after defaults peaked at over 80 percent.

In 2012, the youth fund was embroiled in controversy amid indications that it was abused, with beneficiaries failing to honour their debts.

Giving oral evidence to the Parliamentary Portfolio Committee on Youth, Indigenisation and Economic Empowerment, Stanbic Bank and now defunct Allied Bank revealed the youth loan funds were looted with some beneficiaries misrepresenting their ages and addresses.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.