Local human rights groups have rapped Empower Bank for failure to serve ordinary youths it purports to serve due to its exclusionary requirements which must be met for the young to be eligible for a loan.
Empower Bank, was formed two years ago, and is a registered deposit-taking micro bank under the confines of the Microfinance Act and is regulated by the Reserve Bank of Zimbabwe.
The bank offers loans for youth-led businesses in all sectors, asset finance, guarantees, and savings accounts across urban, peri-urban, and rural areas in the southern African nation.
The premier relationship micro bank is aimed at empowering marginalised communities and small businesses to upscale through wealth creation.
Zimbabwe Environmental Law Association (ZELA) programmes assistant, Fadzai Midzi said since the government’s National Development Strategy 1 (NDS1) speaks to youth empowerment, it is imperative to probe the type of youths being targeted by Empower Bank.
She said the bank is too exclusionary in nature since its terms of reference do not target the marginalised people who often lack securities like vehicles and houses.
“The requirements for one to get a loan from Empower Bank are exclusionary, especially for youths. For one to get a US$5 000 to start a business will need collateral be it a car or a house,” she said.
“It is unreasonable since there are very few youths who own a car or a house,” said Midzi adding the requirements for accessing loans discourage the youth empowerment drive.
For one to apply for a loan from Empower Bank, security is needed while without immovable or movable assets can utilise guarantees from institutions or individuals.
Zimbabwe Coalition on Debt and Development (ZIMCODD) official Justice Muzondiwa said interest rates when borrowing in Zimbabwe are too high compared to other countries in the region.
“It is very difficult for youths to access loans from Empower Bank due to lack of collateral and high-interest rates. For instance, if one needs a US$5000 loan he will have to back at an interest rate of 44% per annum which amounts to US$7200,” Muzondiwa bemoaned.
He told NewZimbabwe.com the government must adopt the Botswana way of empowering youths.
“Botswana youth development fund states that one will get 50% of the total applied for as a grant by virtue of being a citizen. One will only have to pay back 50% of the loan,” he said.
“The interest rates are very low than the 44% per annum charged on ours. In Botswana, the information can be accessed online and one will download the forms on the internet whilst officials will respond in 45 days. I applied for one and it’s two years now they have not responded.”
Muzondiwa also called for the decentralisation of the Empower Bank from major cities and towns to marginalised areas for everyone to access the financial institution.