Deal to revive mortgage, construction markets

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ZB Building Society and PG Industries (PG) have agreed a deal to revive Zimbabwe’s mortgage and construction industries, under stress for nearly a decade and confirmed paralysed when the country adopted multiple currencies last year.
Hyperinflation took a toll on savings and mortgage financing in the last 10 years, affecting the demand for construction materials and new building stocks and limiting activity to unfinished projects and refurbishments.
Under the deal – called “Build Now, Pay Later Plan” – ZB is setting up a sinking loan facility to eligible applicants, while PG, the largest maker and supplier of building and construction materials in Zimbabwe, is providing a wide range of building materials.
The size of the mortgage varies according to income and is available only to ZB account holders and PG’s traditional clients.
The deal is poised to create business for ZB building society and PG’s seven manufacturing divisions, namely PG Building Supplies, DST, Johnson & Fletcher, PG Glass, PG Timbers, Zimtile and Msasa Timbers.
This may quicken the recovery of the two industries projected to be the last to recover during the country’s transitional period, so far largely fragile and lengthy.
Property values are also seen picking up and attracting new investments.
By the start of last year, the country had not had a major construction activity in more than ten years after the country’s contracting order book shrank drastically and forced capacity utilisation down to under 10% as project financing collapsed.
However, the gravity of Zimbabwe’s infrastructure decay signals the future is bullish for both industries should savings improve significantly enough to support mortgage lending and civil engineering activities.
More recently, construction tenders have made a slow comeback in the local media, led by mining and construction sectors, which are targeting higher levels of capacity utilisation after closing 2009 at an estimated 35% and 32%, respectively.
The growth of any economy is premised on the stock of construction and mortgage activities.