By BENEDICT TEMBO
AFTER being on the back foot for sometime, the Zambia National Building Society (ZNBS) has mooted a strategy to reposition itself on the country’s financial market to reassert its relevance.
ZNBS is growing and most of its growth is organic.
“We have not taken over any other business, we have not combined any efforts with any institution,” ZNBS managing director Joseph Chikolwa said, justifying his organisation’s robust growth.
Mr Chikolwa said ZNBS’ growth strategy is based on its desire to get back to its core business – mortgages – while at the same time increasing its customer base.
ZNBS’ business strategy recently received K165 million recapitalisation from Government.
We have received the entire amount that Government pledged to recapitalise this institution.
“It has been a very big injection of confidence,” Mr Chikolwa said of the money which has greatly helped ZNBS promote its loan product.
From the K165 million, K20 million has been disbursed in mortgages while K18 million has been paid out in building materials loans.
“In total, K38 million has been disbursed to more than 90 clients. We have a pipeline of applications in excess of K60 million; but you will appreciate that these have to be subjected to rigorous scrutiny in line with our lending policy. It also takes a bit of time to process the security documentation, hence the slow uptake,” Mr Chikolwa explained.
He added: “With the funds from Government, we have so far attended to over 100 applications for both construction and outright purchase cases and so far, 90 have been successful and have been availed the facilities.”
Even if ZNBS is in dire need of funds, the ZNBS chief executive officer is aware of Government’s myriad obligations.
“We do not expect any further funding by way of recapitalisation from Government,” Mr Chikolwa said.
ALTERNATIVE SOURCES
Instead of heavily relying on ‘big brother’ Government, Mr Chikolwa and his dynamic management intends to showcase its innovation by raising capital from the markets.
“What we are expected to do is leverage on this very big opportunity and ensure that we become self-sustainable. We expect to grow by utilising the funds given to us prudently so that these funds are revolving,” Mr Chikolwa enthused.
Perusing through the institution’s budget, Mr Chikolwa went on: “We also expect to go to the capital markets to raise K150 million through a housing bond issue. Our budget for 2014/15 is to increase our mortgage portfolio to over K500 million by March 2015.”
He explained that given the steady demand for housing loans for outright purchase and for building cases, ZNBS anticipates achieving its targeted growth in the mortgage portfolio.
“Our confidence is also buttressed by the fact that we are entering into memoranda of understanding with various employers for housing schemes,” Mr Chikolwa said.
STATE SUPPORT
Although ZNBS does not anticipate further funding from Government, it still expects tax incentives from the State and has submitted proposals to the Ministry of Finance.
“We still require support from the Government in terms of tax incentives. We have made submissions to the 2015 budget so that the Building Societies are given the lower corporate tax rate which is enjoyed by banks,” Mr Chikolwa said.
WHY?
“This will enable us plough back these tax savings into the mortgage portfolio. We have also requested that the tax rebates on mortgage interest are reinstated so that more members of the public are able to afford to borrow to buy or build houses,” Mr Chikolwa justifies the need for tax incentives.
CHANGING ENVIROMENT
Internally, ZNBS is responding to the rapidly changing and competitive business environment by doing three things:
• Focusing on its core business which is the mortgage business
• Improving on its internal procedures and processes to enhance service delivery
• Enhanced customer awareness or marketing programmes to ensure the public becomes more aware of ZNBS products and services
GROWTH STRATEGY
Currently, ZNBS branch network covers 19 branches scattered in 17 districts, with one agency at Soweto Market in Lusaka, giving it a wide representation across the country.
“We will be entering two new districts soon. We have plans to open more branches in Nyimba and Chinsali in Eastern and Muchinga provinces respectively subject to the Bank of Zambia or regulatory approvals,” Mr Chikolwa said.
He said feasibility studies were undertaken which reflected the viability of these two new locations (Nyimba and Chinsali) where land has already been secured to construct the branch offices.
STAFFING LEVELS
ZNBS has over 326 full time employees, most of them in Lusaka at the Head Office and at its Permanent and Society House Lusaka branches.
Staffing levels are expected to grow due to the rising demand for the products and services it offers.
“The growing demand entails that we engage more staff in sales and marketing. Apart from growth, we will have to replace staff that retire, resign or are dismissed. The number is expected to grow to 350 by 31st March 2015,” Mr Chikolwa said.
He said apart from opening physical branches, ZNBS is in line with the financial sector development plan being spearheaded by the Bank of Zambia which obliges financial institutions to promote financial inclusion using other methods/ means such as technology.
“At the moment, we are looking at various options such as mobile phone banking to reach out to more customers and would be customers,” Mr Chikolwa said.
INVESTMENT PORTFOLIO
ZNBS’ investment portfolio includes infrastructure or a property portfolio as well as loans and advances to the public.
Property Portfolio;
• Lusaka – Century House, Permanent House, Chachacha House and Society House which is under re-development.
•Permanent House in Livingstone
• The building housing Kabwe
branch
• Permanent House in Choma
•Permanent House in Livingstone
• Bwafwano House, Security
House and Nordesia in Ndola
• Kitwe- Permanent House
• Chingola-Bwafwano House and Permanent House
• Chililabombwe- Permanent House
• Mufulira – Permanent House and Security House
ZNBS’ flagship project at the moment is the Society House Redevelopment Project, which is being undertaken by itself in collaboration with the National Pension Scheme Authority. This project is expected to be completed in June 2015.
The Society has invested in real estate since inception and has a number of properties.
“However, we would like to mention that we are in the process of refurbishing all our properties to modern standards. We started with three branches (Choma, Kabwe and Livingstone) which have been completed. We launched this programme last year. Currently, we are working on Chililabombwe and Solwezi branches and we shall be commencing on Chachacha House in Lusaka,” Mr Chikolwa said.
He added: “We will soon be calling for bids for the refurbishment of our Permanent House in Chingola, Bwafwano House in Chingola, Nordesia House in Mufulira and Security House in Ndola. Our tenants have been complaining about the poor state of these buildings and we have embarked on this programme in response to these complaints.”
FURTHER EXPANSION
ZNBS has some housing projects on the cards. With various partnerships it has with local authorities and construction companies, ZNBS intends to mass construct low to medium cost houses in various districts across Zambia.
“We will be starting with Nyimba district as a pilot project. Once successful, we can then roll out to other districts in line with where there is demand for the houses. We are signing up employee schemes to provide us with this demand, e.g. Zesco, both from the public and private sector,” Mr Chikolwa said.