Paidamoyo Chipunza Senior Reporter
The National Social Security Authority (NSSA) yesterday launched a building society to avail affordable loans to thousands of low-income earners in need of low-cost residential accommodation, including people in the informal sector.
Called National Building Society (NBS), the building society opened with an initial capital of $25 million in Harare yesterday.
Vice President Emmerson Mnangagwa who officially opened the building society, became its first client.
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NBS managing director Mr Ken Chitando said Government expected the building society to provide at least 2 000 housing units per year, 30 percent of them earmarked for civil servants.
According to Zim-Asset targets, Government should provide at least 300 000 housing units by 2018 to ease the housing backlog which currently stands at 1,25 million.
Mr Chitando said there would be preferential pricing for first time home owners at a low interest rate of 9,5 percent for mortgages over a 25-year tenure.
He said interest rates and tenure were key in improving affordability.
“Our value proposition is premised on affordability, ease of access and security of investments. In terms of pricing we believe that we should look at it from a segment based and we will look at lower interest and fees for the first segment,” said Mr Chitando.
“There is going to be a preferential pricing for first time home owners and therefore we are looking at high volumes and lower margins,” he said.
He said NBS would look into market segments that included individuals, low income earners, the informal sector and schools.
He said there would be also a scheme for upmarket and corporate accounts.
He said the bank would come up with targeted products that resonated with each market segment.
Mr Chitando said NSSA, the majority NBS shareholder, had injected $25 million as initial capital investment and the bank expected its first project to come to fruition before the end of the year in Harare.
He said negotiations for land in Bulawayo and Masvingo were underway.
Mr Chitando said NBS’s model sought to address current market dynamics such as harsh liquidity environment, high interest rates, high deposits as well as low salaries with at least 72 percent of the population earning a salary below the poverty datum line.
“We are part of a social market and the social market that NSSA has, has led to the establishment of NBS. This is really to assist low income earners to access mortgage finances at rates which are affordable compared to what prevails at commercial banks.
“We would like to make these services available mainly to the low markets who we believe are the largest contributors to NSSA, notably civil servants,” he said.
Mr Chitando said in addition to housing projects, the bank would also take deposits from the market, provide transactional banking, extend loans and participate in bank insurance.
Mr Chitando said as a brainchild of NSSA, NBS was also looking forward to provide tangible benefits to contributors before they retired.
“This whole programme is all about providing financial security. When people get to retire they already have something meaningful that they would have as part of their balance sheet. So NBS is acting as a vehicle to deliver financial security to the constituency that Government has,” he said.
Mr Chitando said NBS looked forward to cascade its services throughout the country.
Speaking at the same occasion, Public Service, Labour and Social Welfare Minister Prisca Mupfumira said NSB was a fulfillment of Government’s commitments as enunciated in ZimAsset to address challenges faced by Zimbabweans in practical ways.
“NBS is for all Zimbabweans including those that have been previously marginalised and left out of formal banking,” said Minister Mupfumira.
She said Government would continue to avail other initiatives that speak to the needs of Zimbabweans to accelerate the implementation of ZimAsset.
Earlier on while officially launching NBS, Vice President Mnangangwa said the entry of another building society onto the market augured for deepening of financial markets in Zimbabwe and would fill a void that the sector had been struggling to meet.
He decried current high interest rates on the market which led to a high default rate and the proliferation of land barons who were milking Zimbabweans of their hard earned cash saying these should end.
“I want to take this opportunity to challenge the NBS board and management to think outside the box and come up with innovative products that answer to the immediate and long term needs of those of our people without houses and homes of their own,” said VP Mnangagwa.
He implored NBS to tap into markets such as vendors, cross boarder traders, market gardeners, artisanal miners, subsistence farmers and informal traders who were traditionally sidelined from mortgage financing.
He said beyond housing, Government was working on a series of other measures to cushion workers and the generality of Zimbabweans.
These include a National Health Insurance Scheme and provision of affordable seed capital for the unemployed to start up businesses.
“In addition to providing access to financial services for the majority of the bankable population, we hope that the national financial inclusion strategy will also create healthy competition within the sector, which will ultimately translate to better services for Zimbabweans,” he said.
Local Government, Public Works and National Housing Minister Saviour Kasukuwere said his Ministry looked forward to cooperation with NBS in the delivery of a reasonable amount of housing units to lower the current demand.
“We believe that NBS will live up to its expectations as a professional and ethical financial institution guided by the highest standards of corporate governance,” he said.