Non-Collaterized Loans For Gweru Informal Traders
…says no need for collateral
Gweru based informal traders are set to benefit from non-collaterized loans and building mortgages offered by a fast growing micro finance institutions, Tinrue Finance Pvt Ltd under an arrangement that will enable medium to low income earners access credits at a rate of 7.5 percent per annum.
By Delicious Mathuthu
Tinrue Finance, a subsidiary of TM Group of companies is targeting medium to low income earners and informal traders who may not have collateral which is one of the key requirements of local financial institutions.
“The portfolio is now offering salary based loans and small business loans for the in-formalized groups with interest rates at very competitive rates of 7.5 percent per annum,” says TM Group Chairperson, Dr Tinashe Manzungu.
He says the project started in the City of Progress but plans are underway to take it countrywide and the mortgage loans idea, as he says, is one of the first in the Southern African region.
“The first project was commissioned in Gweru late last year but already plans are at an advanced stage in having the same products in Harare, Bulawayo and Kadoma this year.
“Currently Tinrue Finance is the only microfinance providing mortgage lending in the SADC region,” Dr Manzungu said.
Under the scheme, as the Group Chairperson said, the mortgage lending aims at providing medium and low income prospective home seekers with high density residential stands where one can have an opportunity to be assisted in building a home with the amount to be paid in installments of up to 15 years.
The salary based loans aim to mitigate individual lifestyles in the current economic challenges till month end at not more than 10 percent interest rate.
Dr Manzungu added that the programme is in line with government’s ZimAsset programme aiming at providing housing solutions and poverty eradication through financial provision to Zimbabweans
The loans are instant for the formally employed and take not more than 24 hours for those in the informal business sector.
“We have come up with instant loans for the salaried which are disbursed within 30 minutes of application while we have also come up with loans for the in-formalised sector who have been of late not been recognised by the banks as they do not have collateral. These loans are disbursed within 24 hours of application,” he said.
The microfinance institution says since the inception of the scheme there has been high demand for the loans with a significant number of clients from the Midlands State University and mining giant Unki Mines.
The informal sector has potential to grow the economy if adequately funded which, according to research, contributes almost half of the Zimbabwe’s current economic activities with an estimated US$7 billion, accounting for between 40 and 50 percent of the country’s overall economic growth.
Given their impact in the economy, the informal business sector however faces various viability challenges but mainly lack of capital and collateral which leads to a host of other problems in the process.
Tinrue Finance is licensed by the Central Bank and is a subsidiary of TM Group of companies working hand in glove with another portfolio, Zimbuild Properties in providing housing which has also partnered with banks such as BancABC.