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Checking the market’s pulse

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When you contribute to a column such as this one, it’s easy to get preoccupied with high- sounding matters such as the too-big-to-fail phenomenon, anti-money laundering, know your customer, etc at the risk of neglecting practical issues unfolding on the ground which have a more immediate and significant impact on the deepening of financial markets.

This week we focus on the pulse of the financial markets as we review recent financial developments that deal a blow to financial exclusion and discover that the patient is alive though not really well, but should get better with further injections of liquidity.

In late September, Campion Financial Services, an indigenous company which owns and operates the Roadport regional bus terminus, announced plans to introduce a debit card facility for cross-border traders in partnership with Selafin of South Africa and Standard Bank of South Africa.

Travellers would be issued with automated teller machine (ATM) cards for use in South Africa, which eliminates the need to carry cash and the risk associated with it.

Travellers intending to utilise the facility are required to deposit a minimum of R500 and a maximum of R50 000 in cash at the Roadport before departure, which they can withdraw at ATMs and point-of- sale terminals in South Africa.

The key benefits of this facility are the convenience and security which it confers on cross-border traders’ transacting needs.

On October 7, President Robert Mugabe launched Women’s Development Savings and Credit Union’s Village Bank in Gokwe.

Though not much is known about its activities, the name of the bank speaks volumes about its activities at a grassroots level.

We are not sure how the Village Bank relates to the Women’s Bank project that is being driven by Deputy Prime Minister Thokhozani Khupe.

However, we reiterate our earlier assertion that for such projects which are prone to populist influences, it is important to ensure that the nuts and bolts of proper banking are in place in order to ensure sustainable operations.

Local company Mikemusa (Pvt) Ltd announced plans to launch what is touted as Zimbabwe’s first mobile payment system targeted at Zimbabweans in the diaspora.

It uses Near Sound Data Transfer Technology to securely sign the transaction using the sender or recipient’s mobile phone.

According to a company official, during sign-up, a prepaid mobile wallet account is automatically created for the applicant into which funds are then loaded through direct bank- to-bank online payment or direct bank cash deposit.

To make a remittance, the customer enters the recipient’s name and phone number, the amount to be sent, and picks a secret pass-code for the recipient.

The sender can also enter a personalised text message that will be automatically delivered to the beneficiary’s phone together with the transfer confirmation.

Mikemusa’s local payout partner is NMB Bank Limited, which identifies the recipient upon presentation of the national identity document and the relevant pass-code.

The benefits of this mobile payment system inlude convenience and the combination of utility (achieving the objective of transferring funds) and communication.Given the low salary levels in the civil service, pressure has been mounting on government to find ways of improving the conditions of its workforce.

The $6 million housing fund to be disbursed to approved applicants at 5% interest for a tenure of 10 years, will have come as welcome relief to both the employer and employee.

Apart from releasing liquidity into the civil servants’ pockets, which should in turn boost demand for building materials, this facility also benefits the four building societies which have been designated to handle the loans.

The construction industry recently announced plans to launch a multi-million-dollar mortgage bond to revive the sector.

This is a most welcome development against the background of a dearth of significant bonds in the market as, according to the Construction Industry Federation of Zimbabwe (Cifoz), prospective homeowners are required to pay a 40% deposit to secure a mortgage bond from financial institutions.

Cifoz president Phillip Chiyangwa said that they had approached 21 banking institutions with proposals for the bond.

At least the construction industry is not waiting for someone else to solve their viability and liquidity challenges; they are taking the bull by the horns.

Chiyangwa was recently elected president of Cifoz and one thing you can’t accuse him of is not being a man of action.

Wherever he is, he creates a buzz around himself, and you have to give it up to him for sheer flair and making things happen.

The value of the consuctrion industry’s assets is currently estimated at US$50 million and monthly subscription inflows into its pension fund are estimated at US$1 million and this cashflow could be channelled into a sinking fund in which funds can build up in anticipation of the redemption of the bond at maturity.

Apart from assisting with providing housing, which is a fundamental human right, if Cifoz can pull it off, the bond will result in employment creation as more construction projects come on stream and it will also improve the country’s infrastructure.

The bond may also enable Cifoz to facilitate the issuance of guarantees that are a requirement when its members go to tender for big construction projects.

Construction companies are currently not able to secure such guarantees from banks.

lOmen N. Muza is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd. He writes in his personal capacity. Feedback: omen.muza@gmail.com

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