Tendai Kamhungira 
THE EmpowerBank’s gross lending increased by 159 percent to $61 million in 2020, driven by appetite for credit among its target customer-base, the youth.
This comes as most banks have adopted a cautious approach to lending, with the average prudential liquidity ratio remaining high at around 70 percent, according to Reserve Bank of Zimbabwe (RBZ) governor John Mangudya.
“The loan book grew from $5 million to $61 million from 2019 to 2020 in historical terms and in inflation-adjusted terms, this was ab159 percent growth,” Rudo Kumirai, EmpowerBank’s board vice chairperson said in the institution’s results for the year ended December 31, 2020.
Governor of the Reserve Bank of Zimbabwe, John Mangudya.
This also comes as the central bank, in a recent report on financial inclusion in the country, has said access to formal financial services by previously disadvantaged groups such as women, the youth and SMEs has been augmented by the establishment of targeted concessionary funds and setting up of targeted deposit-taking microfinance institutions such as the Zimbabwe Women’s Microfinance Bank and EmpowerBank for the youth.
Meanwhile, Kumirai said the bank recorded a positive growth of 110 percent in net interest income, rising from $2 million in 2019 to $27 million in 2020, further pushing its capital to $137 million, which is above the statutory requirement of $5 million.
With the RBZ having set new regulatory capital requirements, placing the threshold at an equivalent of US$5 million by December, 31, 2021, Kumirai said the institution was upbeat it would meet the target.
“The microfinance bank is hopeful that the regulatory capital will be met as evidenced by shareholder support which was received during the year 2020 with fresh capital injection of $100 million. Government has also allocated $250 million for the microfinance bank in the 2021 budget and this should allow the … bank to be significantly capitalised by the 2021 year-end,” Kumirai said.
The youth-centred bank, which has so far disbursed 3 700 loans since its inception, also witnessed a significant growth in deposits.
“Deposits also went up from $593 747 to $8,2 million in the comparative period in historical terms and this represented growth of 206 percent in inflation adjusted terms,” Kumirai said.
She said despite the negative effects brought by the Covid-19 pandemic, the bank had managed to remain afloat, adding that it was optimistic about its impact in the short-to-medium term on the back of appetite for credit by its target customers.
“The microfinance bank will be deepening its product offering by ensuring efficiency in the current services being offered. The … bank is also looking forward to rolling out exciting products including the youth business starter packs in various industries so as to give our youth a head start in business.
“Digital channels continue to be critical especially with the Covid-19 pandemic amongst us, and the microfinance bank will be investing more in these channels.
“The bank will ensure that our customers continue to be served in a safe and convenient environment,” Kumirai said.
