Last week my Editor suggested that the article titled Catch Your Bank Doing Something Right was “to be continued next week” apparently because of space constraints.
Report by Omen Muza
Well, there wasn’t much else to say except to point out that while good customer service, fine interest rates or affordable bank charges are all important facets of the banking experience, it is kind gestures which bank customers will remember the longest.
It could be an unexpected intervention that enables someone to walk or see again, a timely donation that averts hunger and thirst or a scholarship that changes someone’s life forever.
It is such random acts of kindness that will give banks a human face, not denials, justifications or explanations of various kinds. I concluded the article by asking about the last time you caught your bank doing something right. Has it been a while? Go right ahead and let them know, who knows what they might do?
On Thursday October 18, I attended the inaugural Credit Insurance Conference organised by Credsure in collaboration with ZB Bank Limited. It is the subject of this instalment which focuses on some insights that emerged on the day.
It was a decidedly insurance event, but my interest in trade finance, to which Export Credit Insurance renders much support, demanded my participation. As acknowledged by guest of honour and Industry and Commerce deputy minister Mike Bimha, the conference was timely in that it addressed the topical issue of credit risk management in the context of high levels of credit default risk in the economy.
The role of credit insurance in supporting government policies such as the Industrial Development Policy and the National Trade Policy, both launched in March 2012, was duly highlighted, as was the importance of protecting exporters from political and commercial risks while facilitating export finance.
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Credit insurance can potentially provide significant relief to lenders and creditors through reduction of bad debt provisioning by up to 80% for domestic transactions and by up to 90% for export transactions.
The conference also noted that when it comes to credit insurance (and indeed several other aspects of the Zimbabwean economy); the country sometimes appears to be “statistically off the map”, giving the impression of some big international conspiracy lurking out there, ready to marginalise the country at every turn. But then again, perception of the country’s risk profile and the reality on the ground have never tied-up, have they?
While there is often a perception that Zimbabwe’s membership of the African Trade Insurance (ATI) as envisaged by the National Trade Policy will bring competition to Credsure’s doorstep, the opposite is in fact true.
ATI will complement rather than compete with Credsure because its primary purpose is to cover political or sovereign risk as intended by the World Bank and African Governments. ATI will also be expected to boost reinsurance capacity for Credsure and other African Export Credit Agencies.
The issue of a credit reference bureau and its critical role in managing risk has been on the cards for a long time now and it appears that security of data is at the heart of implementation delays. While there are concerns about sharing proprietary data, it must be realised that there is much more to be gained from actually sharing information as opposed to withholding it from each other. Isn’t the current level of Non-Performing Loans (NPLs) a sufficient incentive for the protagonists to close ranks and expedite the formation of a fully functional Credit Reference Bureau?
In Zimbabwe, the lack of up-to-date financial information still constitutes a great challenge to the credit underwriting process, especially given that 80% of financials are not audited. This argues a strong case for the automation and sharing of data in electronic format, which provides the opportunity for analysis and for connecting the dots, so to speak.
It was also agreed that while there is an immense opportunity for debt factoring/invoice discounting driven by a multitude of people willing to sell on credit and to discount the proceeds, takers were however still few and far between given limited capacity for reinsurance and the prevailing liquidity challenges.
In conclusion, the overbearing influence of sovereign risk on Zimbabwe’s operational environment was noted while its impact on the acceptability of trade finance instruments and supporting risk mitigatory tools in international markets was duly acknowledged.
