THE People’s Own Savings Bank has obtained a licence from the Reserve Bank of Zimbabwe to start a mortgage finance division to tap into growing demand for housing. The mortgage loans period will be up to 10 years at an annual interest rate of 12 percent, said a senior official who declined to be named for professional reasons. Clients will obtain mortgage loans of not more than 25 percent of gross salary, the official added.
The financial institution, established more than a decade ago and famously known for its “green books”, is 100 percent owned by the Government through the Finance Ministry. The bank has a total of 500 000 depositors geographically spread across the country. “The purpose (of the mortgage loans) is for both for construction and purchase of existing properties. Modalities to operationalise the division are in progress,” said the official.
The bank will use resources from the Communication and Allied Pension Fund, whose contributors are employees of POSB and telecommunication companies, NetOne and TelOne. Efforts to get an official comment from POSB proved fruitless by the time of going to press. Zimbabwe is faced with a huge housing backlog. The housing shortage, estimated at 1,25 million units, translates to a national backlog of five million or 40 percent of total population.
The most available housing finance schemes have little incremental effect on the national housing stock as these are either exclusively packaged for a few targeted groups or are priced beyond the reach of the poor.
Under Zim-Asset, Zimbabwe’s economic blueprint running from 2013 to 2018, Government intends to reduce the housing backlog through the provision of serviced land, strengthen public private partnerships and adoption and adaptation of new building technology.
As such, the Government recently launched a new housing scheme known as “Own Your Own Home Scheme”, which seeks to meet targets set under the blueprint. The scheme is expected to provide up to 300 000 serviced residential stands in the next three years.
In a trading update last week, the POSB said it is targeting $7 million profit in the year to December after recording a $5,6 million profit for the half year ended June this year. Chief executive Mr Admore Kandlela said the bank was also looking at growing its markets share.
“We are also looking for the best possible ways of boosting profitability in this competitive but viable industry and we hope to declare a dividend to the Government,” he said. At the unveiling ceremony of the new board recently, Finance and Economic Development Minister Patrick Chinamasa encouraged the board to promote financial inclusion, support Small to Medium Enterprises, and adopt financial innovations essential to attracting savings and promoting productive investment in the economy.
The new board is chaired by Ms Matilda Dzumbunu. Other board members are Mr Israel Ndlovu, Mr Onias Jambwa, Mr Ignatious Mvere, Ms Nomsa Chindomu, Ms Caecilia Nyamutswa, Ms Monica Mureriwa, Mr Admore Kandlela (group chief executive officer) and Ms Patience Shuro (chief accounting officer).
The POSB, formerly the Post Office Savings Bank, was established in 1904 to mobilise savings for national development. The bank commenced its operations through Post Office infrastructure network. Since its formation, the bank operated as a statutory fund with no legal entity status. In 1965, the Post Office Savings Bank (Chapter 249) was promulgated providing for the administration of the Savings Bank by the Posts and Telecommunications Corporation on an agency basis. This position remained so until April 1 2001 when a new act, The People’s Own Savings Bank of Zimbabwe Act (Chapter 24:22) was promulgated establishing the bank as a corporate body to carry-on the business of a savings bank.