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Zambia: Zanaco to enter micro-finance as part of digital push, says CEO

By David Whitehouse
Posted on Wednesday, 15 July 2020 15:55

Zanao CEO Henk Mulder (Twitter / @zanacoplc)

Zambia National Commercial Bank plans to launch microfinance services including loans and savings for poor households in the fourth quarter, CEO Henk Mulder tells The Africa Report.

The services are part of Zanaco’s digital strategy and will rely on digital credit-scoring and collection systems, says Mulde. The loans will be mainly to households, for amounts as small as $50 or $100. “You can do it efficiently if you can do it digitally,” he adds.

Microfinance has too often concentrated on lending to the exclusion of saving, argues Mulder. “That’s the problem. Borrowing is not necessarily a good idea with high interest rates. It can bring people into trouble.” Microfinance borrowers from Zanaco will also be able to have a savings account, he said. “It’s not a one-product push.”

Mulder is optimistic about prospects for Zambia’s economy. Discretionary spending globally has been hurt by COVID-19, but basic needs in Zambia are still being fulfilled. Copper, he notes, has rebounded to well above $6,000 per ton.

Still, Zambia needs greater economic diversification away from copper mining and agriculture. “We need more industrialisation. We need more value-added,” he notes. There are not enough small new businesses starting in Zambia, says Mulder. But young entrepreneurs should not be borrowing straight away to get going. “You have to start small.”

The government needs to educate and give incentives to entrepreneurs. “Starting a business doesn’t mean that you are going to make a profit right away,” something which the government doesn’t always seem to understand, he says. “They could do better on that.”


Zanaco, which listed in 2008, is Zambia’s biggest local bank. Its largest shareholder with a stake of 45% is the African investment company Arise, which is backed by Norfund, Rabobank, and Dutch development bank FMO.

READ MORE Zambia: IMF support needed to avoid Argentina-style default

Mulde, who became CEO in 2016, will step down to be replaced by Mukwandi Chibesakunda, CEO of National Savings & Credit Bank of Zambia, or NATSAVE.  Chibesakunda, the first female President of the Zambia Institute of Banking and Finance, joins Zanaco on 1 October. “It’s time for a Zambian CEO,” says Mulder, who plans to seek non-executive African roles.

  • The bank’s digital strategy means that IT security will need to be high on Chibesakunda’s agenda, says Mulder. “It’s a worry we all have as bankers. I would advise her to focus a lot on it.”
  • A priority will be ensuring that the bank’s management board has sufficient depth, adds Mulder.
  • Chibesakunda will also need to close branches as digital channels take greater prominence, notes Mulder.
  • This, he adds, is a more sensitive issue for a Zambian bank, as opposed to a foreign bank operating in Zambia.
  • About 30% of branches will need to be cut in coming years, he estimates.
  • Physical points of contact will be maintained by greater reliance on agents, for example family shops, where basic banking transactions can be carried out.
  • These agents are a crucial element of the bank’s digital strategy, says Mulder.
  • Zanaco now has about 6,500 agents versus 400 in 2016.
  • Mulder expects the figure to rise to 20,000 in the next three years.

Mulder also expects his successor to be charting a course through a process of national banking consolidation. The current total of 19 banks in Zambia needs to drop to about nine or ten, he says, adding that the process would be facilitated by the implementation of Basel II capital requirements for banks. In any case, he says, “consolidation is a question of time. It’s unavoidable.”

Bottom Line

Zanaco will need discipline not to lend too fast too soon to poor households, while keeping an emphasis on less lucrative savings products.

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