Chris Goko/Eric Chiriga
CENTRAL African Building Society (Cabs), Zimbabwe’s largest mortgage lender, says it held nearly $800 million worth of United States Agency for International Development (USAid)
housing funds as of June 30.
Ambrose Matika, the bank’s head of mortgage operations, told businessdigest that the money was mainly made up of accumulated interest on unused funds.
Out of the $128 million allocated to it and which money it had to match, Cabs lent $258 million out of the blended total plus interest, he added.
“Pending disbursement, the USAid funds earn interest at the prevailing negotiated certificate of deposit rate (general commercial paper investment), which is capitalised,” Matika said recently.
“As at June 30 2004, Cabs had $778 million on the USAid account, mainly made up of… interest on undisbursed funds as utilisation… has largely come to a stand still due to inhibitive salary ceilings that have been set for the scheme from time to time,” he added.
The bank, wholly owned by Anglo-South African insurer Old Mutual, is part of a consortium of local building societies mandated by the country’s Finance ministry to distribute millions worth of mortgage funds under the donor-supported public/private sector housing programme.
Key beneficiaries of the USAid facility include the 50-house Pumula South project in Zimbabwe’s second largest city of Bulawayo.
Project Management Turnkey is the hand behind Pumula’s development and notices taken out last week indicate that work to wind down the housing project is on-going.
Cabs recorded a 300% growth in mortgage advances and in anticipation of further advances in the wake of company strategies to circumvent statutory subscriptions, disbursed $43,3 billion to June 30.
Of the sum, $33,3 billion was loaned out on the security of residential properties, while $5,4 billion was given on commercial and industrial properties. While a number of people benefited from the current USAid-linked projects, Matika expressed concern at the low wage ceilings of eligible communal groups, who are essentially low-income earners.
Although construction activitywas “very low” and Cabs did not finance any new bulk schemes except for existent projects, the bank spent about 10% of the near $40 billion on erecting new buildings.The bank classifies existing properties as those embodying existent and fully developed buildings.
Matika, however, noted that despite the “generally perceived affordability limitations”, there are people with “high enough incomes” who qualify for loans at the current high interest rates of 100% plus.
Some of these groups include high-income earners who are essentially executives and other professionals in receipt of very high salaries.
Employer-assisted property buyers, meaning those enjoying company subsidies and charged lower interest rates with the company topping up the difference also join a narrowing group of people still managing to secure loans.Loan upgrading, the Cabs executive said, is also a common feature these days and this entails selling one’s property in order to lower borrowing amounts for re-financing of new properties.
Noted Matika: “I must point out though that due to affordability limitations some of these executives and professionals are lowering their area preferences and borrowing to purchase properties in denser areas.”
He also said some self-employed people have been able to “credibly prove” their ability to repay mortgage loans and have, therefore, expanded the group of Zimbabweans accessing loans. Corporate borrowers have also been making the grade and this is basically on the back of audited financial accounts and projections of good earnings.