The youth-targeted – Empower Bank – is facing a funding squeeze, as it is struggling to raise the capital needed to finance youth projects due to the prevailing economic situation in the country.
Empower Bank was set up in July 2018 by the government to bring youths into financial services while providing a financial institution sensitive to their needs.
The bank has four branches in the country namely – Bulawayo, Harare (main branch), Masvingo and Mutare.
According to the bank’s Acting Chief Executive Officer, Shadreck Mhembere, in notes presented to the Parliamentary Portfolio Committee on Youth in Bulawayo Wednesday, the economic environment worsened soon after its launch in the city, which resulted in negative financial consequences.
“The economic environment began to worsen soon after the launch of the bank, in October 2019 which marked the beginning of the inflationary pressures. Hyperinflation and foreign currency challenges are affecting both the youth businesses, bank, its suppliers and service providers,” he said.
Mhembere said there was lack of funding capital from the bank to adequately cover the youth needs.
He also noted the ‘lengthy and somewhat rigid’ procurement processes in a hyperinflationary environment and technological changes have affected the bank negatively.
“The bank’s target customers, who are the youth, lack relevant business skills, patience and perseverance to run enterprises economically. They face collateral and business infrastructure challenges. Poor record-keeping for most youth-led businesses is also a challenge,” said the bank official.
The acting CEO added that due to lack of funding for a proper core banking system, has led to a bottleneck to offering the bank’s customers a full bouquet of banking services.
“This requires more than US$2 million in funding,” he said.
So far, Empower Bank has 10 849 accounts while over 48 000 people have received financial literacy training and $20.5 million worth of loans have been disbursed to 2 409 beneficiaries.