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We are using microfinance division to penetrate informal sector: Malaba

Last week Agribank released its half year results where it posted US$2,1 million profit. Zimababwe Independent business reporter Fidelity Mhlanga (FM) caught up with the bank’s Chief executive Sam Malaba (SM) soon after announcing the bank’s financial results to discuss about various issues pertaining the financial institution. Below are the exepts:

Agribank CE Sam Malaba
Agribank CE Sam Malaba

FM: What’s your impression about the newly published results

SM: They are very positive results. We are happy with the strategies that have been put in place that have bear these results.

FM: In your presentation you spoke about activities of micro Finance Institutions. Can you explain further?

SM: We already have a Micro finance division in the bank. So its now operating from 20 branches countrywide. From each branch we have two micro finance officers they go on to identify microfinances projects we can fund. We look to fund projects in agriculture and mining as part of our financial inclusion strategy because basically we want to expand our outreach. The significant number of segment of the Zimbabwean economy that is now trading are now operating in the informal sector. So we as a bank, we are using the microfinance division to penetrate the informal sector.

FM: Tell us about your point of sale machines (POS) you have acquired as a bank.

SM: We want to purchase at least 1 000 POS machines by year end. So far, we have 850. We are looking into acquiring 150 between now and December.

FM: What has been the uptake of plastic money in your bank?

SM: It has been very good. Basically, people are beginning to realise that they can easily transact via internet or using cards than using cash.

FM: What has been the effect of the cash crisis to your bank?

SM: It lowers your income from a transaction business as a bank, but you have to move on to get income through the e-banking products. It becomes a switch from cash withdraws to a card based transcations.

FM: There has been complains of high bank charges during this cash crisis time.

SM: No, its not correct. We have actualy lowered our charges and our charges for all our products have come down. We lowered our Pos charges, our withdrawal charges as well.

FM: What parameters are you putting in place to lower non perfoming loans?

SM: Basically, we will tighten in terms of our credit appraisal system. Tighten in terms of recoveries. We will look at the value chain system to say yes we are giving this loan. What is the market for the products. We will look at the sector we are giving the loan and make sure it is collaterised.

FM: What makes it difficult to reach 10% NPL rate by end of June as was prescribed by RBZ?

SM: It is because, we are coming from a high figure so we have done very well to stand at 17%.We see it as a progression. So by October, we will be at 10% so it’s a matter of missing the deadline by a few months.
FM: What type of support have you been giving to tobacco farming?

SM: We have been funding them for the past two seasons by assisting the building of rocket barns and drip irrigation for small scale farmers.

FM: What is your impression about the bond notes which will be introduced in October?

SM: I have no problem with them since they will bring the incentive to the exporters. I don’t have the pessimism about the bond notes.

FM: Do you see opportunity in investing in mortgages?

SM: Yes, but I see that when we are capitalised to US$100 million that’s when we will do mortgage finance, lease finance and asset management. That is why we want to have a tier 1 bank with US$100 million capital to offer full range of banking. We want to create a strong balance sheet. By 2018, we want to be US$100 million capital bank.

Even the RBZ deadline is 2020, but my shareholder want us to be there by 2018.

FM: What support are you giving to Small to Medium sized Enterprises (SMES)

SM: Our support to SMES is through Micro Finance Institutions. Its an expanding unit and we have resources to support this division. They are a ready part of our strategy and it dovetails with what we are doing to ensure financial inclusion. We want to have a portfolio of say US$6 million to give to SMEs by end of year.

FM: What are the prospects of the bank?

SM: Very positive and we have to continue to support small scale farmers to support the economy.

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