The commissioning of the Women’s Bank and the Youth Bank in recent weeks marks a definite improvement in the lot of those who have tended to be left out of the group of people most commercial banks feel to be the safest when it comes to lending money.
And it also fairly obvious that the majority of their clients are going to be in smaller businesses and that many will be relatively inexperienced in business. A major company listed on the ZSE who happens to have a woman as its CEO is unlikely to be knocking on the door of the Woman’s Bank, and even more unlikely to get assistance if it does.
Nor will the lucky young woman or young man who has inherited a viable established business with loyal customers and a decent relationship with another bank be likely to be the first person to get assistance from the Youth Bank.
So what sort of people are likely to be helped, and what sort of extra services will be required.
Many of those approaching these two banks are likely to be going into formal business for themselves for the first time. This means some degree of vetting, to find out if the woman or youth has the skills, work ethic and preferably some experience from the formal or informal sector to make a go of their opportunity.
Some will be obvious. They will have done a proper apprenticeship or internship, gained experience, have a good grasp of what the business entails, be able to present a coherent business plan and generally show they know what they are going and simply need some capital to get started. And this group is likely to be the bulk of the new customers of the two banks.
But there will be many others who have good ideas, are hard-working but have never had any formal business training or experience yet are quite possibly a low-risk borrower so long as they have some sort of mentoring and someone who can check up on them.
Even with the clients who do have some business experience, and certainly with those who have little, at least in the formal sector, the banks are going to have to be more active than is normal for a banker. They will need to be in contact with those organisations that have similar goals, to empower women and youths, to help with training and mentoring, especially on how to turn a decent idea into a viable business.
If Zimbabwe is to grow fast, then a lot of people are going to have to become self-employed. But not everyone is a natural business person although they might well be highly competent at what they know and do. Fairly obviously many of these will be among the clients of the new bank, needing the advice as well as the loan.
This is why these applicants are coming to the two banks. If they were more obviously successful business people they would be applying to a more general commercial bank.
There will, of course, be chancers. All banks have met people who take out loans and use the money for something quite different and squander their opportunity. We assume that the Women’s and Youth Banks will have the normal procedures and checks in place to winnow out these people. Since the banks are likely to receive far more requests for assistance than they can possibly grant, they can afford to be tough in some areas and be a little choosy over who they help.
They will also have to be able to know when to tell a successful customer that the time has come for that borrower to move on, and become a regular customer of a regular bank. This will release resources for the next group of those who need special help.
The two banks will fill a hole in the market and fill a need. But they are not and cannot be a cash cow for those just need money. In a very special way they will be the incubators of new enterprise and new companies, helping those who have largely been ignored but who are fundamentally sound business risks if extra care and services are taken into account.