Steward Bank Unveils SME Zama Zama Business Account
Not that long ago, small businesses had personal relations with their local banks. But that was before the economic collapse, followed by the collapse of many institutions. Today’s banks, more often than not, don’t see enough profit margin in giving out small business loans. But Yesterday (05/04/16) Steward Bank unveiled the SME Zama Zama business account.
Chief executive officer, Dr Lance Mambondiani believes that SMEs don’t just need money ,but the aslo need mentorship. Steward Bank’s SME Zama Zama business account will combine funding and mentorship programmes for the SMEs.
“Less than 10 percent of the country is banked. We are going after the 90 percent who are not banked. We want to continuously match SMEs with people with the money,” Dr Mambondiani said.
Steward bank has managed to get a number of partners on board.
“We have several partners that have contributed to this facility. These include USAID, SNV and FAO. The entire pot comes to US$15 million,” he said.
The Zama Zama business account will offer a range of products for SMEs, including free advertising, basic financial accounting training, banking services, free website, crowd funding and an incubation pod for SMEs in Harare.
But what is important to remember here in Zimbabwe is the low overall approval rate for small business loans, which was at 39 percent for April of 2015 at big banks. So even though loan approvals are grown at banks, small businesses are still hearing “no” more than half the time. And we have also seen a number of player showing interest in the SME sector like ZB Bank and Old Mutual.
The need for loans by SMEs along with the unwillingness of banks to give them has increased the market share of non-bank lenders from 10 to 30 percent. But some of the rates for these loans are quite high when compared to traditional loans.