Micro Finance Business Plan and Projections

8/17/2019 Micro Finance Business Plan and Projections

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Ratisson Finance (Private) Limited

BUSINESS PLAN AND

STRATEGY


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Table of Contents

1. VISION, MISSION AND VALUES ................................................................................................................... 4

1.1. VISION .................................................................................................................................................. 4

1.2. MISSION ............................................................................................................................................... 4

1.3. VALUES ................................................................................................................................................ 4

2. PHYSICAL ADDRESS ................................................................................................................................... 4

3. EXECUTIVE SUMMARY ................................................................................................................................ 5

4. ANALYSIS OF BUSINESS ENVIRONMENT .................................................................................................. 6

4.1. ECONOMIC OUTLOOK ......................................................................................................................... 6

4.2. THE INFORMAL SECTOR .......................................................................................................................... 7

4.2.1 Overview o f the informal sector in Zimbabwe ..................................................................................... 7

4.2.2 Profitability and v iability of pro jects in the in formal sector ................................................................ 9

4.2.3 Constraints on financing the info rmal sector ................................................................................... 10

4.2.4 Reasons for failing to pay/default ..................................................................................................... 11

4.2.5 Reasons fo r failing to access bank loans by the informal sector ..................................................... 11

4.2.6 Reasons for no t applying for loans by the info rmal sector .............................................................. 12

4.2.7 Sources o f borrow ing by the informal sector players ...................................................................... 12

4.2.8 Challenges in dealing with informal sector ....................................................................................... 12

4.2.9 Reasons fo r not registering businesses by the informal sector ....................................................... 13

4.2.10. Average value of business capital requirements by sector ........................................................... 14

4.2.11. Average monthly sales ................................................................................................................... 14

5. COMPETITOR ANALYSIS ........................................................................................................................... 15

5.1. MICROFINANCE INSTITUTIONS IN ZIMBABWE .................................................................................... 15

5.2. COMPETITION WITH BANKS ................................................................................................................. 15

6. BUSINESS STRATEGY AND OBJECTIVES ................................................................................................ 16

6.1. OBJECTIVES ............................................................................................................................................ 16

6.2 PRODUCTS AND SERVICES ..................................................................................................................... 16

7.1. BACKGROUND ....................................................................................................................................... 19

7.2. OBJECTIVES OF THE BUSINESS PLAN ................................................................................................ 19

7.3. SELL A ND BUY-BACK REAL ESTATE PRODUCT ................................................................................. 20

7.3.1. REPO ASSETS ............................................................................................................................... 20

8. MARKETING STRATEGY ............................................................................................................................ 25

9. FINANCIAL STRATEGY .............................................................................................................................. 27


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10. RISKS ..................................................................................................................................................... 28

10.1. FINANCIAL RISKS .............................................................................................................................. 28

10.1.1. Credit Risk ................................................................................................................................. 28

10.1.2. Interest Rate Risk ...................................................................................................................... 28

10.1.3. Exchange Rate Risk ................................................................................................................... 29

10.1.4. Liquidity Risk ............................................................................................................................. 29

10.2. NON-FINANCIAL RISKS ..................................................................................................................... 29

10.2.1. Strategic Risk ............................................................................................................................ 29

10.2.2. Operational Risk ........................................................................................................................ 29

10.2.3. Reputation Risk ......................................................................................................................... 31

10.2.4. Compliance Risk ........................................................................................................................ 31

10.3. RISK MITIGATION .............................................................................................................................. 31

10.3.1. Managing Credit Risk ................................................................................................................ 31

10.3.2. Managing Interest Rate Risk...................................................................................................... 31

10.3.3. Managing Exchange Rate Risk .................................................................................................. 32

10.3.4. Managing Liqu idity Risk ............................................................................................................ 32

10.3.5. Mitigating and Managing the Non-Financial Risks.................................................................... 33

10.4. RISK MANAGEMENT FRAMEWORK .................................................................................................. 34

10.4.1. Planning and designing p rocesses and procedures ................................................................ 34

10.4.2. Scanning the environment ........................................................................................................ 34

10.4.3. Structures and Capacity ............................................................................................................ 34

10.4.4. Sectorial limi ts, maximum tenures and maximum exposu res. ................................................. 34

11. PHILOSOPHY FOR LENDING ................................................................................................................. 36

11.1. CANONS OF GOOD LENDING-CAMPARI .......................................................................................... 36

11.1.1 Character ........................................................................................................................................ 36

11.1.2 Ab ili ty / Capab ili ty .......................................................................................................................... 36

11.1.3 Margin / Terms ............................................................................................................................... 37

11.1.4 Purpose .......................................................................................................................................... 37

11.1.5 Amount / Capital ............................................................................................................................ 37

11.1.6 Repayment ..................................................................................................................................... 37

11.1.7 Insurance / Security ....................................................................................................................... 37

11.1.8 Collateral security Considerations ................................................................................................ 38

12. SWOT ANALYSIS ................................................................................................................................... 41


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13. BASIC STAKEHODERS INVOLVED AND THEIR MOTIVES .................................................................... 42

13.1. PROPERTY HOLDERS ....................................................................................................................... 42

13.2. REAL ESTATE AGENTS ..................................................................................................................... 42

13.3. SECURITIES EXCHANGE COMMISSION ........................................................................................... 42

13.4. RESERVE BANK OF ZIMBABWE ....................................................................................................... 42

13.5. SHAREHOLDERS ............................................................................................................................... 43

13.6. BANKS AND OTHER FINANCIERS .................................................................................................... 43

13.7. CREDIT RATING COMPANIES ........................................................................................................... 43

13.8. FINANCIAL SERVICES BUREAU ....................................................................................................... 43

13.9. ZAMFI ................................................................................................................................................. 43

14. APPENDIX .............................................................................................................................................. 44


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1.

VISION, MISSION AND VALUES

1.1.

VISION

The vision of Ratisson Finance is “to continually improve the livelihoods of the communities we

operate in through hassle free access to credit and provision of customer focused service”.

1.2. MISSION

Ratisson Finance seeks to create and continuously increase shareholder value through the

provision of excellent service and innovative products to its customers and a conducive

working environment in which every employee is encouraged and assisted to develop to their

full potential.

1.3.

VALUES

Customer focus

Innovation and flexibility

Respect

Honesty

Integrity

Professionalism

2. PHYSICAL ADDRESS

The company will start with one branch located in Harare. The address will be: -

Ratisson Finance (Pvt) Ltd

Number 147 Kwame Nkrumah Avenue

Harare

Zimbabwe


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3.

EXECUTIVE SUMMARY

It is the background of lack of liquidity in the economy and difficulty in accessing finance for working

capital and business expansion that Ratisson Finance (Pvt) Ltd is being birthed. The economic

meltdown experienced in recent years has left a large number of people unemployed. Most of these

have turned to self-employment by embarking on self-help projects. The hyperinflation and subsequent

dollarization wiped out most savings and monetary assets thus creating a huge demand for credit from

entrepreneurs who wish to recapitalize their businesses. The banking sector has always looked at the

lower level of the financial services market as being largely un-bankable and indeed that market

segment has remained largely unbanked.

All these factors have together created a substantially high and unsatisfied appetite for credit to finance

new projects, re-tooling and for working capital purposes. It is with response to this situation that

Ratisson Finance has been incorporated to tap into the market and provide to financial services to a

sector with potential to generate income, create wealth and assist the government realize one of its

goals to eradicate hunger and poverty.

Ratisson Finance intends to solve the abovementioned challenges by bringing in innovative and

customer friendly financing products. The company product line will include working capital loans,

micro-housing finance products, asset backed finance, consumer and salary based loans, order

financing, invoice discounting and many more. The company realizes that lending to this sector of the

economy presents several challenges and risks. Lending models such as group model and cautious

appraisal techniques such as CAMPARI will be employed to ensure a healthy portfolio of loans is

maintained. Various risks such as interest rate risk, credit risk, reputation and regulatory risk, business

risk, liquidity risk and strategic risk have been identified as having a likely effect on the business if not

managed carefully. Risk mitigation strategies have been identified to deal with these risks. These

include the setting up of an effective risk management framework. Board committees will be set up to

deal with the various inherent risks such as Credit Committee, and Risk and Audit Committee.

Financial projections and proposed organizational structure and presented at the end of this document

as annexures.


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4.

ANALYSIS OF BUSINESS ENVIRONMENT

4.1.

ECONOMIC OUTLOOK

Zimbabwe’s economy remains in a fragile state, with an unsustainably high external

debt and massive deindustrialization and informalisation. The average GDP growth

rate of 7.5% during the economic rebound of 2009-12 is moderating. This economic

slowdown is due to liquidity challenges (e.g. the lack of and high cost of capital and

revenue underperformance), outdated technologies, structural bottlenecks that include

power shortages and infrastructure deficits, corruption and a volatile and fragile global

financial environment.

The constrained fiscal space has forced the government to adopt a contractionaryfiscal policy stance, while the use of the multi-currency regime limits the use of

monetary policy instruments.

Much remains to be done in Zimbabwe to improve the business environment. Key

challenges to doing business in Zimbabwe include policy inconsistency, funding

constraints, corruption, inefficient government bureaucracy and inadequate

infrastructure.

Real GDP growth is estimated to have decelerated to 3.7% in 2013 from an estimated

4.4% in 2012. This reflects a continued slowdown in the economy as a result of limited

sources of capital, policy uncertainty and the high cost of doing business. Real GDP

growth is projected to marginally improve to 3.2% in 2015. In 2014, inflation averaged

about -1.4% and is projected to remain in the negative in 2015 (currently at -2.7%).

Inflation developments will continue to be influenced by the USD/ZAR exchange rate,

international oil prices and local utility charges. Persistent liquidity shortages combined

with low effective demand and a weak South African rand will dampen inflationary

pressures in the economy. The country is currently experiencing a decline in money

supply. At the same time, the South African rand depreciated by about 20% in 2014

and continues on a downward trend in 2015.

Zimbabwe is experiencing a structural regression, with the acceleration of

deindustrialization and informalisation of the economy.

The poor performance of domestic revenue inflows and the rise in recurrent

expenditures will continue to constrain fiscal space, while the continued use of the


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multi-currency regime will result in monetary policy largely remaining unchanged. In

2013, the government unveiled the Zimbabwe Agenda for Sustainable Socio-

Economic Transformation (ZIMASSET, 2013-18). ZIMASSET has a number of positive

elements, such as the adoption of results-based management and a clear

implementation matrix. The policy blueprint also correctly identifies a number of key

binding constraints to development, but it does not clearly articulate the country’s

institutional and financial capacities to deal with those constraints simultaneously

within the five-year period.

4.2. THE INFORMAL SECTOR4.2.1 Overview of the info rmal sector in Zimbabwe

The informal economy in Zimbabwe has been growing fast on the back of declining formal

economic activities and has become the largest employer as the economy is failing to absorb many

job seekers into formal employment. According to the 2011 Labour Force Survey, 84% of the

currently employed population aged 15 years and above are in informal employment. In both urban

and rural areas, small to medium enterprises operations are dominated by female entrepreneurs

who account for 50.3% of the those currently employed in the informal sector, dominating the

wholesale and retail trade and primarily operate from homes and streets (Labour Force Survey,

2012). Men tend to dominate the relatively complex and larger activities such as construction,

transport, welding and carpentry. Like any other country in Africa, the informal sector in Zimbabwe

is dominated by trade-related activities accounting for 51.9%, whilst manufacturing and

construction accounts for 16.7% with other services accounting for only a small percentage of this

sector. Most of these workers in the informal sector are self-employed and the activities are carried

out in the three broad activities namely; small-scale production enterprises, petty trading and

distribution activities, and the non-tradable service sector. The 2012 FinScope SMEs Survey, also

supported the results of the 2011 Labour Force Survey, noting that the majority of SMEs surveyed

are engaged in small-scale production, with the agriculture sector accounting for 43%, driven by

growing produces for the fruit and vegetable market. About 9% were into manufacturing, mainly

tailoring, carpentry, welding and brick making. The FinScope Survey noted that 33% of SMEs were

in the non-tradable service sector and petty trading activities and these related to the vending and

selling of clothes, food and also include in this category newspaper vendors and airtime vendors.


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In the year 2010 the government of Zimbabwe enacted the Indigenization and Economic

Empowerment Act (Chapter 14:33), which among other things promoted the growth indigenous

entrepreneurs/ small to medium enterprises reserving certain sectors of the economy to indigenous

people, especially the retail sector which is mainly dominated by the informal sector. According to

the FinScope 2012 survey on Small to Medium Enterprises, there are over 2 million individual

entrepreneurs and 800,000 SMEs with employees and these are estimated to be employing over

2.9 million people. The discussion with the informal sector players also revealed a lot about the

manner in which they are organized as well as their potential. The traders in Mbare indicated that

collectively that can realize about $1500 per day in revenue. Many of them however do not have

bank accounts, as the procedure is very cumbersome with banks requiring so many documentssuch as proof of residence and letters of employer which most of whom are tenants/lodgers

ordinarily do not have.

The players are also failing to access loans from banks since banks want a guarantor (with pay

slips) which automatically excludes self-employed traders, small-scale manufactures and service

providers some of whom do not earn regular monthly income. Most of the traders hardly keep any

records in a format accepted by banks as proof on the capacity/potential and profitability of the

business. Many of the informal sector players ,who rely on self-financing from personal savings,

close funding/working capital gaps by borrowing from expensive sources of money such as

microfinance institutions and other informal sources that factor in higher risk premiums on the

interest rate. Examples include dealers of apples who get informal credit at Road Port bus station

at costly terms payable on a daily basis. Some microfinance institutions have also realized the

potential from informal sector players and lend amounts of between $100 and $500, which are

repayable on a daily basis once the loan matures. Despite these unfavourable and costly terms,

the players have been able to generally repay the loans. The only challenge is the lack of

information about the operation of the players, which imbeds a lot of risk.

The following are some of the constraints that have been identified to hinder informal sector development.

riskiness of lending because of poor management and high rate of business failure;

high administrative cost;

low productivity;


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under capitalization;

shortage of skills;

poor attitudes of the loan applicants;

aversion to disclosure of information; and

Lack of collateral.

Another constraint which tends to block the flow of credit to the informal sector is lack of information. Small

business owners most often possess more information about the potential of their own businesses but in

some situations it can be difficult for business owners to articulate and give detailed information about the

business as the financiers want. Additionally, some small business managers tend to be restrictive when it

comes to providing external financiers with detailed information about the core of the business, based on

the suspicion that information about their business may leak through to competitors

4.2.2 Profitability and viability of p rojects in the informal sector

The viability in the informal sector can be assessed from three perspectives; the revenue (sales)

that the players realize the expenditure that is sunk into the business and the value of

equipment that the players have invested into the business.

The average revenue for informal sector players is about $1,413.3 per month, ranging from aminimum of $120 and a maximum of $24,000 per month. The maximum value shows that there

is indeed a significant amount of resources that are being generated in the informal sector.

Out of this revenue, an average of about $894.5 is used to purchase raw materials (for

manufacturers) and materials for resale (for retailers), which implies that the average profit is

about $518.8 per month, with the maximum monthly profit being about $21,000.

However, taking into account the owners and workers’ salaries and other overheads, the

players generally break even, as on average they make a loss of about $5, after spending an

average of about $1,418.3 as total expenditure. Since this includes their salaries, this generally

implies that the profits are mostly taken wholly out of the business for investment into different

aspects of livelihoods.

The monthly average of $1,418.3 total expenditure incurred by the informal sector players

ranges from a minimum of $200 to a maximum of $20,000 per month.


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4.2.3 Constraints on financing the informal sector

Policy constraints can be looked at from both the demand side and supply side. On the demand

side, policy should be able to instill confidence of the public with the banking system.

The policies do not make it easier for the informal sector players to bank with financial

institutions. The policies also do not make it easy for banks to craft tailor made products and

services for the informal sector.

Most policies governing the financial sector are not friendly to the informal sector players. To

open bank accounts, banks require too much documentation which informal sector players may

fail to produce, even if they might have the money to bank. The requirements are mostly a result

of policy pronouncements, which makes policy a hindrance to access to bank services by theinformal sector players. Although banks could be willing to develop tailor made products for the

informal sector, prudential regulation policies by the central bank might only allow some limited

flexibility for the banks.

Access to bank services for the informal sector thus could require changes on bank regulations

and standards governing loan collateral, approval and documentation especially when the

central bank might not allow too much flexibility.

Policies that also try to formalize the informal sector by collecting taxes or forcing them to

register have also been found to have a negative impact on access of financial services for the

informal sector.

Taxation systems also serve as a policy constraint for mobilizing resources from the informal

sector as the taxation systems in many countries are multi-step, complex and put a lot of

discretionary powers on tax authorities.

The fear of taxation is mostly a result of lack of knowledge about the tax process, given that the

low levels of income that the majority of informal sector players enjoy would not earn prohibitive

levels of tax.

Proof of income for opening bank accounts and to access loans is difficult to obtain given that

there are either no records or there exists just simple records which do not qualify from the

normal regulatory template as proof of income.


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4.2.4 Reasons for failing to pay/default

Figure 1

4.2.5 Reasons for failin g to access bank loans by the informal sector

Figure 2

Family problems,

2%

Interest rates too

high, 15%

Maturity period

too short, 5%

Bad business

period, 36%

Without

difficulty, 42%

Insufficient

Collateral, 31%

Incomplete

documents, 31%

Enterprise deemed

not viable, 21%

Bank did not have

funds, 17%


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4.2.6 Reasons for no t applying for loans by the info rmal sector

Figure 3

4.2.7 Sources of borrowing by the informal sector players

Figure 4

4.2.8 Challenges in dealing with info rmal sector

Players in the sector are considered as high risk and some of the activities are perceived

as illegal in nature.

The informal sector also suffers from negative perception

The notion that informal sector activities are illegal and that the players in the sector have

criminal tendencies discourages the banking from advancing loans to the sector as the

Loan terms not

favourable , 13.53%

Do not have

knowledge of banking

requirements and

products, 27.98%

Available loans do not

correspond to my,

2.60%

Procedures are too

complicated, 55.89%

Other sources, 18%

Microfinance, 31%

Banks, 23%

Family, 28%


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banking sector is not allowed by law to deal with clients deemed to be involved in criminal

activities.

However, the informal sector is a heterogeneous group with diverse players and different

levels of development and sophistication of enterprises. The company in particular need a

thorough understanding of the nature and dynamics of the informal sector in terms of

product and service offering; funding requirements; risk profiles; level of profitability;

accounting practices; varied compliance levels with local authorities’ by-laws as well as the

size of enterprises. In this regard the funding challenges faced by the company in the

informal sector also vary. Thus any strategy intervene to support the players in this sector

need take note of this heterogeneity to avoid blanket statements that paint the informalsector with one brush. In depth knowledge may assist the company in devising funding

strategies and intervention measures that adequately respond to the needs of the sector.

4.2.9 Reasons for not registering businesses by the informal sector

Figure

In the process of being

registered, 22%

Could be bad for my

business, 7%

Do not know if I have

to register, 14%

Do not need to register

my business, 28%

Have to pay much

to register, 14%

Too many

requirements to

complete registration,

15%


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4.2.10. Average value of business capital requ irements by sector

Figure 5

AVERAGE VALUE OF BUSINESS CAPITAL BY SECTOR $ AGRI-BUSINESS 951.30

MANUFACTURING 6,542.16

RETAIL 1,485.71

SERVICES 2,939.66

TRANSPOR 4,750.00

4.2.11. Average month ly sales

Figure 6

Retail, 1,615.80 , 20%

Services, 1,169.60 ,

14%

Transport, 944.00

, 12%Agri-business,

765.80 , 9%

Construction, 1,325.70

, 16%

Manufacturing,

2,345.80 , 29%


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5.

COMPETITOR ANALYSIS

5.1.

MICROFINANCE INSTITUTIONS IN ZIMBABWE

There are currently about 147 registered microfinance institutions in Zimbabwe. Competition is very

stiff among the top 6 microfinance institutions. These are MicroKing, Untu Finance, FMC Finance,

Yambukai Finance, Zimnat Finance and Pundutso. The rest of the companies do not compete

directly as they focus on their niche markets. Whilst the credit market is awash with credit seekers,

it is the credit worthy clients that microfinance companies compete for. In this respect, competition

is rife and intense and many of the institutions try to structure attractive packages to create a good

loan portfolio.

5.2. COMPETITION WITH BANKS

Commercial banks will compete only to cherry pick those small businesses which are graduating to

medium scale enterprises on the back of a proven track record of performance. A number of

microfinance institutions have been licensed and are operating. However, most have resorted to

targeting civil servants and salaried individuals at the expense of the enterprising Zimbabweans

who have managed to rise against all odds and offer employment in these ever trying times.

There is therefore more than enough space for Ratisson Finance to come on board, cover this gap,

operate profitably and help the small entrepreneurs make a difference in the economy by providing

them with access to capital. It is equally important to be cognitive of the fact that this is the riskiest

sector of the business economy. Strict risk management principles are imperative for success.


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6.

BUSINESS STRATEGY AND OBJECTIVES

6.1. OBJECTIVES

The overarching strategy is to profitably tap into the largely “unbanked” lower end of the market

comprising informal and small businesses, as well as individuals with a view to:

i. Help eradicate extreme poverty and hunger which is one of the goals prioritized by the

Government of Zimbabwe by offering credit facilities and helping in wealth creation.

ii.

Help achieve the national development goal of financial inclusion by offering financial services

to previously unbanked or under-banked sectors of our society.

iii.

Empower people to improve their standard of living through income generation, savings and

access to credit.iv. Create wealth and achieve a fair return for the investors.

v.

Provide business and project management training as extension services to our customers.

Ease of access, customer centric and user friendly procedures will be key marketing

considerations and will be manifest in the branch roll out as well as staff training and

deployment.

Without compromising security and controls, Ratisson Finance will develop customer interface

procedures that are easily understood and related to the type of customers that we seek to

serve.

Staff will be trained and those with a genuine aptitude for dealing with our type of customers

will be deployed to customer contact duties.

6.2 PRODUCTS AND SERVICES

Innovation and continuous improvement are to be part of Ratisson Finance culture and this will

manifest in new products, services and procedures in response to customer needs. However,

from inception the following products will be offered:

Working capital loans

Consumer credit


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Order finance

Bridging finance

Micro-housing loans

Home improvement loans

Debt factoring

Financial advisory

White Money/Pawning

Real Estate Based Finance (Sell and Buy-Back product and the Invest and Earn product)

6.3. PRODUCT DESCRIPTION6.3.1. Work ing capital loans

These are loans that will be availed to enterprises that are in business and are able to provide

proof of being legitimate businesses and operating legally. Entrepreneurs will get access to

these loans upon provision of collateral. Such collateral will be in the form of movables or

immovable.

6.3.2. Consum er credi t

These small loans granted to individuals in gainful employment to assist them with a variety of

personal needs such as assistance with school fees, purchase of laptops etc. Ratisson

Finance will grant such loans subject to credit and the employers’ agreement to accept a stop

order to make a direct payroll deduction and pay proceeds direct to Ratisson Finance.

6.3.3. Order finance

Ratisson Finance will provide finance to clients which cannot fund. The tenure of the facility is

short-term and is limited to the time it takes to execute the order plus any pre-agreed credit

terms. Ratisson Finance would have to obtain an undertaking that payment would be made

direct to it.

6.3.4. Bridg ing f inance

This is a short term requirement arising from a situation where a sure and demonstrable

source of funds cannot as yet come to bear on the situation e.g. a fixed liquid investment


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awaiting maturity. Ratisson Finance would bridge the gap by between the present need for

funding and the maturity date of the investment against and undertaking by the investment

house to pay proceeds direct to Ratisson Finance.


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7.

REAL ESTATE BASED FINANCE

There are basically two types of real estate products to be offered by Ratisson Finance namely the Sell

and Buy-Back Real Estate Product and the Invest-and-Earn Real Estate Product

7.1. BACKGROUND

Ratisson Finance is a microfinance company established with a view to easing the liquidity

challenges that are faced by Zimbabwean businessmen and prospective business owners. Many

entrepreneurs who existed during the pre-dollarization era had their working capital and savings

wiped away by inflation. Quite a number of individuals who foresaw this unfortunate event hedged

their risks by investing into real estate, automobiles and electronic gadgets. Many of thebusinesses turned informal as a survival strategy during the Zimbabwe dollar era. Many shunned

banks and resorted to real assets.

Post dollarization many entrepreneurs are stuck with real assets with no ready liquidity for working

capital and business startup. The birth of Ratisson Finance (Pvt) Ltd and the introduction of its

housing product is a direct response to convert the real assets of the many entrepreneurs into the

much needed liquidity. This is a great step in unlocking value for all progressive Zimbabwean

entrepreneurs. The solution comes in the form of structured finance packages.

A chicken egg phenomenon has also be dogged the entrepreneur. Whilst banks require collateral

for loans, they also demand that the same entrepreneur put at least 50% of own capital into the

business, which he does not have. What he has is an asset and entrepreneurial prowess, and no

cash. This criterion in lending has left many potential business people locked out of the playing

field. We believe that we can turn the value locked up in real assets into liquidity and contribute to

the development of the nation.

7.2.

OBJECTIVES OF THE BUSINESS PLAN

The focal purpose of this manuscript is to provide a strategic guideline to the mechanisms and

architecture of the products intended to be introduced by Ratisson Finance (Pvt) Ltd to the market

of Zimbabwe especially its housing product. Whilst these products are already in use worldwide

and even neighboring countries such as Malawi, and South Africa this business plan seeks to

elucidate how the product will be introduced in the contemporary state of economy of Zimbabwe.


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The plan intends to demonstrate the profitability and the viability of the business model. In

addition, the business plan also seeks to highlight the major challenges and risks likely to be

faced by Ratisson Finance (Pvt) Ltd. It also articulates a lucid panacea to deal with such

challenges and inherent risks.

7.3.

SELL AND BUY-BACK REAL ESTATE PRODUCT

7.3.1.

REPO ASSETS

7.3.2. WHAT IT IS:

A repurchase agreement is the sale of an asset combined with an agreement to repurchase

the same asset at a higher price at a future date. It is also referred to as a "repo."

7.3.3.

HOW IT WORSKS/EXAMPLE:

For example, party A may sell a specific security to party B for a set price and agree to buy

back the security for a specified amount at a later date. In actuality, however, the sale is not

a real sale, but rather a loan, secured by the security. As with collateralized loans, the

security being used as collateral is "held" by party B (in case party A defaults and does

not repayment the amount to party A.) The incremental amount to be repaid by party A torepurchase the security is the amount of "interest" earned on the loan by party B.

An example of the construct is illustrated in the figure below.


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7.3.4.

THE RATISSON FINANCE REPO MODEL

7.3.5.

PROPERTY HOLDERS

A property holder is an entity which owns an asset that qualifies under the CRAB

(described in paragraph 3.2.2.). In this context, an entity is taken to be:

A company registered under the Companies Act

An NGO (registered)

An individual real person

A Church

Government department or Ministry

Municipality etc.

7.3.6.

CRABCRAB stands for Collateralized REPO Asset Base. The following are qualifying assets

under CRAB

Residential property

Motor vehicle (not more than 5 years since date of manufacture)

Residential stand (with title deeds)

Commercial property


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Commercial stands

Warehouses

Government Treasury Bills

Zero Coupon Bonds

Corporate bonds

Listed Equities

Private equities

7.3.7.

STEPS IN LIQUIDATING AN ASSET USING REPO

i.

Property holder is in need of finance. He has a property worth $200,000 for instance.He does not wish to sell the property permanently, but instead want to raise finance for

his business using the property as collateral. The property holder determines that his

business venture is in need of say $40,000.00. Property holder approaches Ratisson

Finance (Pvt) Ltd.

ii.

Ratisson Finance (Pvt) Ltd evaluates the property holder using the basic CANONS of

lending. The property holder is given credit rating. The credit rating determines the

level of finance and pricing of the facility. Property holder is either approved or

disapproved. If client is approved, proceed to step next step.

iii.

Ratisson Finance (Pvt) Ltd will engage its property Valuer to ascertain the price of the

asset. The asset valuation costs are borne by the client and the client should agree to

these charges before Ratisson Finance (Pvt) Ltd engages the Valuer.

iv.

Consequently, Ratisson Finance (Pvt) Ltd will engage its lawyers to carry out due

diligence on the asset with the Deeds Registry Office if it is real estate and if

successful proceed to next step.

v.

A REPO (Repurchase agreement) is signed between Ratisson Finance (Pvt) Ltd and

the Property Owner specifying the terms and conditions including selling price re-

purchase price and tenure.

vi.

Simultaneously, title deeds are received from the Property Holder and bonds are

registered against the property with the Deeds Registry Office.

vii.

Property Owner is paid the REPO selling price.


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viii.

On maturity, the Property holder pays Ratisson Finance (Pvt) Ltd the Re-Purchase

price.

ix.

In the event of default, Ratisson Finance (Pvt) Ltd will sell the property to recover the

Re-Purchase price or any outstanding balance, the remainder of which will be paid out

to the Property Owner.

7.3.8.

DEALING WITH FINANCIERS

Ratisson Finance (Pvt) Ltd shall maintain a pool of collateralized assets. The assets shall be

in the form of REPOs backed by real estate properties and other qualifying assets. The

collection of the collateralized assets shall be called the “CRAB = Collateralized REPO AssetBase”. Ratisson Finance (Pvt) Ltd will raise finance by securing lines of credit and bonds

secured by the CRAB.

Fund level = A% of CRAB

A% is the security to loan ratio that Ratisson Finance (Pvt) Ltd shall determine from time to

time taking into account the following:

Quality of assets in the CRAB

Tenure of securities used to raise funding

General economic fundamentals driving interest, inflation etc.

The financials risks inherent in the transactions

The Board of Ratisson Finance (Pvt) Ltd shall set a ceiling to A% and this ratio must be

reviewed periodically.

7.4.

INVEST-AND-EARN REAL ESTATE PRODUCT

This product involves a property owner offering his house/property to be used as collateral

security for loans borrowed by Ratisson finance. In return the property owner will earn a monthly

income commensurate with the value of the property. Ratisson finance will use the title deeds to

raise finance for on-lending to its clients. A collateral base fund will be created. This is the value

of the collection of all assets offered by property owners under this product. Ratisson finance


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raises loans worth, say 50% of the value of the collateral base. This provides a cushion against

property withdrawals and breaches. The type of financing raised will be preferred as lines of

credit to allow for flexibility of drawdowns and early repayments. The income earned from on-

lending the funds raised is expected to offset or cover the monthly payments to property owners

and remain with a good margin.


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8.

MARKETING STRATEGY

Against the background of high demand, high risk and under supply of financial services in the target

market segment, the major issues have to do with access and capacity.

Along with these considerations must be prudence in risk management and faithful adherence to the

strategic objectives of Ratisson Finance as already outlined above. The marketing strategy will

therefore include the following:

8.1.

USE OF MEDIA

To raise awareness of Ratisson Finance’s existence and product and service offerings.

8.2.

TRAINING AND CAPACITY DEVELOPMENT

To train prospective beneficiaries of our products in basic business and financial management,

savings and to inculcate a responsible attitude towards credit.

Following loan disbursement to successful candidate’s regular and continuous follow up will be

made to ensure the project is on track. This is a way of continuous marketing to build strong and

durable relationships while keeping ourselves in the face of our market all the time.

It is in line with our core objective of building capacity for sustainable income generation and wealth

creation as a means of eradicating hunger and poverty while achieving national development.

8.3.

DESIGN AND DEVELOPMENT OF PRODUCTS

Our products will be designed and redesigned to suit to meet the unique needs of the various

customers in line with our values of flexibility and innovation.

The tenure and repayment terms will be designed to suit the circumstances of the client e.g. a

potato grower whose crop will come to the market in 90 days is unlikely to have funds to effect

monthly repayments, but is able to make bullet a bullet repayment when he sells his potatoes after

90 days.


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In general, long term relationships based on a clear understanding of each customer’s needs and

financing requirements will inform our marketing thrust and activities in line with our philosophy of

customer focus.

The following sectors have been identified and will form the basis of an organized marketing effort:

Consumers/individuals

Manufacturing

Agriculture

Trading

Services

Where organized groups such as women’s clubs can be identified or organized this will help to

organize training and may assist by facilitating group lending and cross guarantees among

members e.g. women at the same market stall.

With respect to consumers the initial approach will be to the employer who agrees to a stop order

system. Thereafter the offer is made to employees.


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9.

FINANCIAL STRATEGY

Ratisson Finance’s financial strategy will be guided by the objective of maximizing the return with

minimum risk on its services and earning assets. To this end the following guidelines will apply.

i. The cost of capital from whatever source, including borrowed capital, will be kept as low as possible

and an Assets and Liabilities Committee will continuously monitor this against specific cost of funds

target.

ii.

For the cost of capital to remain low the $470,000 initial investment required to kick-start the business

should initially be 75% equity financing and 25% debt financing. Keeping the debt financing low in the

initial operating period gives the microfinance unit room to raise more debt funding from investors.iii. Going into the future, the board of Ratisson Finance hopes to keep the debt levels very low at no

more than 80% of equity capital

iv.

The interest rate charged on lending, while being competitive, must reflect the risk and cost of funds

to ensure adequate positive interest return.

v.

Operational costs, including training and other extension activities, must be covered by non-interest

income to the greatest extent possible.

vi.

Earnings must be retained to build capital and boost capacity to build capital and boost capacity as

well as reducing reliance on borrowed capital, thereby improving the return on shareholders’ funds

over time.

vii.

As much of the company capital resources as possible should be deployed to earning assets and as

such, investment in other non-earning assets, especially brick and mortar and motor vehicles will be

kept to an absolute minimum relative to total stock of capital.


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10.

RISKS

Risk taking is an inherent element and integral part of Ratisson Finance’s business in general and,

indeed, profits are in part the reward for successful risk taking in the business. On the other hand,

excessive and poorly managed risk can lead to losses and thus endanger the safety and soundness of

Ratisson Finance as an institution and safety of its financier’s funds. Consequently, Ratisson Finance

may fail to meet its social and financial objectives. This implies that proactive risk management is

essential to the long term sustainability of Ratisson Finance as an institution.

10.1.

FINANCIAL RISKS

10.1.1.

Credit RiskCredit risk is the financial exposure resulting from Ratisson Finance’s dependence on another

party (counterparty) to perform an obligation as agreed. It is the risk to earnings or capital due to

borrowers’ late and non-repayment of loan obligation (REPOs). Credit risk encompasses both

the loss of income resulting from Ratisson Finance’s inability to collect an anticipated interest

earnings as well as the loss of principal resulting from loan/REPO defaults. Ratisson Finance

need to manage the credit risk inherent in the entire portfolio as well as the risk in individual

credits or transactions. Additionally, Ratisson Finance should be aware that credit risk does not

exist in isolation from other risks, but is closely intertwined with those risks.

10.1.2.

Interest Rate Risk

Interest rate risk is the exposure of Ratisson Finance’s financial condition to adverse

movements in interest rates. Accepting this risk is a normal part of Ratisson Finance’s business

and can be an important source of profitability and shareholder value. However, excessive

interest rate risk can pose a significant threat to Ratisson Finance’s earnings and capital base.

Changes in interest rates affect Ratisson Finance’s earnings by changing their net interest

income and the level of other interest-sensitive income and operating expenses. Changes in

interest rates also affect the underlying value of Ratisson Finance’s assets, liabilities and off-

balance sheet instruments because the present value of future cash flows (and in some cases,

the cash flows themselves) change when interest rates change. Ratisson Finance, therefore,

needs to have an effective risk management process that maintains interest rate risk within

prudent levels based on proper identification of the sources and effects of interest risk.


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10.1.3.

Exchange Rate Risk

The risk that Ratisson Finance will have to close out a long or short position in a foreign

currency at a loss due to an adverse movement in exchange rates.

10.1.4. Liquidity Risk

Liquidity risk is the risk of being unable to meet commitments, repayments and withdrawals at

the correct time and place. The purpose of liquidity management is to ensure that Ratisson

Finance is able to meet fully its contractual commitments. The ability to fund increases in assets

and meet obligations as they come due is critical to the ongoing viability of Ratisson Finance as

an institution. Therefore, managing liquidity is among the most important activities conducted byRatisson Finance. Since financial risks are not mutually exclusive, liquidity risk may not be seen

in isolation. Liquidity risk can be trigged by many other factors such as credit risk and or any

other risk.

10.2.

NON-FINANCIAL RISKS

10.2.1.

Strategic Risk

Strategic risk refers to the potential negative impact on Ratisson Finance’s earnings and capital

that can arise in circumstances where decisions taken by the organization or the manner in

which business strategies are executed result in losses or missed opportunities for the

organization to remain relevant in the marketplace as a profitable and viable business entity. It

relates to Ratisson Finance’s ability to effectively, efficiently and prudently respond to business

opportunities in a manner that reflects a strong vision and the ability to employ the resources

necessary to achieve organizational goals in a profitable and sustainable manner. One of the

most understated and underestimated risks within this industry is the risk of having an

inadequate structure or body to make effective decision (this is Governance risk, and is one of

critical strategic risks)

10.2.2.

Operational Risk

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal

processes, people and systems or from external events or unforeseen catastrophes. It includes

the exposure to loss resulting from the failure of a manual or automated system to process,


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produce or analyze transactions in an accurate, timely and secure manner. Operational risk

therefore is imbedded in all of the Ratisson Finance’s operations, including those supporting the

management of other risks.

Common operational risks faced by Ratisson Finance include the following:

i) The MIS system does not correctly reflect loan tracking, e.g. information on amount

disbursed, payment received, current status of outstanding balance, aging of loan by

portfolio outstanding etc.

ii)

Lack of effectiveness and insecurity of management information system in general and

the portfolio management system in particular e.g. software does not have internal safetyfeatures, inaccurate MIS and untimely reports.

iii)

Inconsistencies between the loan management system data and the accounting system

data.

iv)

Treating rescheduled loan as on-site loans

v)

Lack of portfolio related fraud controls

vi)

Loan tracking information is not adequate, e.g. no aging of portfolio outstanding,

inadequate credit histories etc.

The most important types of operational risk could also involve breakdowns in internal

systems and controls and corporate governance. Such breakdowns can often lead to

financial losses through error, fraud or inefficiency. Other aspects of operational risk

include major failure of information technology systems or events such as natural and

other disasters. As Ratisson Finance will be more reliant on technology to support various

aspects of its operations, the potential failure of a technology based system is of concern

in the context of the management of operational risk.

Operational risk can also give rise to reputational and legal risks as the types of failures

outlined above can result in damage to Ratisson Finance reputation and/or legal action by

regulators or customers.


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10.2.3.

Reputation Risk

Reputational risk is the potential that negative publicity regarding Ratisson Finance’s business

practices, whether true or not, will cause a decline in the customer base, costly litigation or

revenue reduction and wipe away investor confidence. Ratisson Finance should be cautious

about how would the public and the markets react to terrorist financing, money laundering,

profiteering and financing illegal activities. Other factors like bad customer service or costly

lawsuits and litigation could all bring Ratisson Finance’s reputation spiraling downward.

10.2.4.

Compliance Risk

Compliance risk is defined as the risk of legal sanctions, material financial loss, or loss toreputation Ratisson Finance may suffer as a result of its failure to comply with laws, its own

regulations, code of conduct, and standards of best/good practice.

10.3.

RISK MITIGATION

10.3.1.

Managing Credit Risk

Effective approaches to managing credit risk include:

i.

Active oversight by board and senior management, well designed borrower screening,

careful loan structuring, close monitoring clear collection procedures etc. To avoid rapid

spread and potential of significant loss, delinquency should be understood and addressed

promptly.

ii.

Good portfolio reporting that accurately reflects the status and monthly trends in

delinquency, including a portfolio at risk aging schedule and separate reports by product,

sector, loan officer, branch etc.

iii.

Following up concentration of credit

10.3.2. Managing Interest Rate Risk

Accurate and timely measurement of interest rate risk is necessary for proper interest rate risk

management and control. In general, depending on the complexity and range of its activities,

Ratisson Finance should have interest rate risk measurement systems that assess the effects of

rate changes on both earnings and economic value. These systems should provide meaningful


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measures of the Ratisson Finance’s current levels of interest rate risk exposure and should be

capable of identifying any excessive exposures that might arise.

A number of techniques are available for measuring the interest rate exposure of both earning

and economic value. Their complexity ranges from simple calculations to static simulations.

Gap Analysis

Duration

Simulation techniques

Stress testing should be designed to provide information on the kinds of conditions under whichRatisson Finance’s strategies or positions would be most vulnerable and thus may be tailored to

the risk characteristics of the company. Possible stress scenarios might include abrupt changes

in the general level of interest rates, changes in the relationships among key market rates (i.e.,

basis risk), changes in the slope and the shape of the yield curve (i.e., yield curve risk), changes

in the volatility of market rates. In addition, stress scenarios should include conditions under

which key business assumptions and parameters break down.

An accurate, informative, and timely management information system is essential for managing

interest rate risk exposure, both to inform management and to support compliance with board

policy. Reporting of risk measures should be regular and should clearly compare current

exposure to policy limits. In addition, past forecasts or risk estimates should be compared with

actual results to identify any modeling shortcomings.

10.3.3.

Managing Exchange Rate Risk

Where Ratisson Finance deals in foreign exchange or across currencies, no open positions

which put the business at risk will be permitted.

10.3.4.

Managing Liquidity Risk

Sound liquidity management can reduce the probability of serious problems. Indeed, the

importance of liquidity transcends the Ratisson Finance as an individual institution, since a

liquidity shortfall at another player in the industry can have system-wide repercussions. For this


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reason, the analysis of liquidity requires the management of Ratisson Finance not only to

measure its own liquidity position on an ongoing basis, but also to examine how funding

requirements are likely to evolve under various scenarios, including adverse conditions.

Ratisson Finance should review frequently the assumptions utilized in managing liquidity to

determine that they continue to be valid. Since Ratisson Finance’s future liquidity position will be

affected by factors that cannot always be forecasted with precision, assumptions need to be

reviewed frequently to determine their continuing validity. These assumptions should be made

under the different categories of assets, liabilities and off-balance sheet activities.

10.3.5.

Mitigating and Managing the Non-Financial RisksThe following are key elements of how Ratisson Finance will mitigate strategic, compliance and

reputational risk:

Maintaining timely and efficient communications among shareholders, customers,

boards of directors, and employees

Establishing strong enterprise risk management policies and procedures throughout the

organization, including an effective anti-fraud program

Reinforcing a risk management culture by creating awareness at all staff levels

Instilling ethics throughout the organization by enforcing a code of conduct for the board,

management, and staff

Developing a comprehensive system of internal controls and practices, including those

related to computer systems and transactional websites

Complying with current laws and regulations and enforcing existing policies and

procedures

Implementing independent testing and transactional testing on a regular basis

Responding promptly and accurately to Ratisson Finance regulators, oversight

professionals (such as internal and external auditors), and law enforcement agents

Establishing a crisis management team in the event there is a significant action that may

trigger a negative impact on the organization

Preserving a strong reputation revolves around effectively communicating and building solid

relationships. Communication between Ratisson Finance and its stakeholders can be the


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foundation for a strong reputation. Timely and accurate financial reports, informative

newsletters, and excellent customer service are important tools for reinforcing a Ratisson

Finance credibility and obtaining the trust of its stakeholders. Reputational risk is managed

through strong corporate governance. Setting a tone of strong corporate governance starts at

the top; an institution's board of directors and senior management should actively support

reputational risk awareness by demanding accurate and timely management information.

10.4.

RISK MANAGEMENT FRAMEWORK

10.4.1.

Planning and designing p rocesses and p rocedures

The application forms that we design and the information that we capture, the cross checkingand references and the updating of such information represent the first steps in risk

management and these things will be done carefully with reference to industry best practice and

a pre-audit to ensure that at every stage along the way is minimized and adequately managed.

10.4.2.

Scanning the environment

Continuous scanning of the environment is important in order to understand developments and

adjust the operating and risk management guidelines accordingly.

10.4.3.

Structures and Capacity

We will set up appropriate structures to manage the various types of risk e.g. liquidity risk, credit

risk. Such structures will include a Risk Management and Compliance Committee and Asset

and Liability Management Committee and a Credit Committee to oversee and review

operations. Capacity implies that the people who occupy the created structures must have the

knowledge and experience to adequately and effectively do the job. It also implies that the

systems and processes in place are adequate to keep such risk at minimum.

10.4.4.

Sectorial limits, maximum tenures and maximum exposures.

The lending book will represent a spread of risk across the various chosen sectors of the

economy. We do not see scope for lending to other sectors e.g. mining, given the small average

loan size that we offer.


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The following is proposed for corporates and individuals.

Figure 6

These guidelines will be reviewed from time to time in line with developments in the economy and

the company’s own capacity.

Consumer

40%

Manufacturer

20%

Agriculture

15%

Trading

10%

Services

15%

SECTORAL EXPOSURE LIMITS


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11.1.3

Margin / Terms

The interest margin and terms offered by the business will reflect the risk involved in the

lending. Proposals that include adequate security are likely to attract better interest rates from

the company than unsecured deals. The amount and complexity of the work involved will

determine the level of fees however remember there may be some room for negotiation with

the company in certain instances.

11.1.4

Purpose

The loans officer will wish to establish that the purpose is an acceptable risk and in the

customer’s best interests. In their optimism to press ahead customers can overlook potentialproblems and the lender can bring a degree of realism to the proposition.

11.1.5

Amount / Capital

The loan officer will consider whether the amount being asked for is appropriate and he may

challenge any assumptions. The amount requested should be in proportion to the customer’s

own stake. A reasonable contribution from the borrower shows commitment to the company.

The borrower should also have a contingency reserve of funds in case the business takes

longer than expected to get off the ground.

11.1.6

Repayment

The repayment source of any lending needs to be established at the outset. Repayment will

usually come from trading profits and this is where your projections will be thoroughly tested by

the bank. Historic trading figures and up to date management accounts are essential for

existing businesses. New startup businesses will be projection led and will be open to

challenge from the loans officer.

11.1.7

Insurance / Security

Security is usually required as a secondary repayment source for the borrowing. The company

does not lend to the security alone and the canons of lending thus far need to be passed

irrespective of the available security. The company will not be in a position to release the

agreed funds until all elements of the security have been completed. The company will also


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look at any potential issues resulting in any gaps in the borrower’s insurance provisions which

may impact of their ability to repayment the agreed finance.

It is unlikely that the actual trading performance will go exactly to what the borrower has

projected and therefore the company will regularly monitor and review progress. The earlier

problems are identified then the better chances are that the company can offer practical advice

to overcome them. An understanding of the borrowing requirements and credit risks associated

with the lending are essential requirements for the loans officer being able to agree the

lending.

11.1.8 Collateral security Considerations

Security should be taken as insurance against unforeseen mishaps outside the control of the

borrower. Security should not be the sole reason for lending and we should not lend expecting

to have to realize it. Therefore, we lend only after full appraisal of credit with particular

emphasis on ability to repay. If there is doubt regarding latter, we do not lend even if security is

available.

Security should normally be perfected before lending out but, if exceptionally, it is considered

necessary to lend first and the amount exceeds the unsecured portion of the managers’

discretionary limit, then prior authority from head office should be obtained.

Valuations should be kept under regular review to take account of changing conditions.

It should be normal to take ultimate shareholders guarantees for facilities to private companies.

The following are features of ideal security:

Easy to realize

Absence of formality in acquiring/disposing

Good and simple title

No liability to the lender

Easy to value

Stable or increasing in value

Reasonable margin


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Security may be divided into two main categories:

First party (customer pledges own security for customers’ facility (ies); Third party (third

party pledges own security for customer’s facility (ies); which may be further divided into:

Tangible e.g.

Cash security

Legal mortgage of property (first mortgage and subsequent bonds)

Life policy ceded (amount of surrender value only)

Pledge of readily marketable stocks and shares.

Set off of credit balances (provided minimum balance stipulated)

Set off of fixed deposits receipts

Guarantee by approved bank

Guarantee supported by tangible security

Pledge of Registered Building Society Shares of fixed deposits

Pledge of registered Financial Institution’s fixed deposits

Intangible, e.g. Guarantees (other than by an approved Bank) unsupported by

tangible security

Notarial bonds (General and Special)

Cession of book debts

Subsequent mortgage bonds (e.g. 2nd, 3rdbonds, etc.) where we are

not first bond holder

Pledge of unquoted shares

Documents covering merchandise under documentary credits

Insurance

Check that customer’s assets are adequately covered for normal

risks.


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Consider whether key man insurance or insurance against other

specialist risks desirable.

CAMPARI looks in detail at specific aspects of a customer and their business.

SWOT analysis compliments and extends CAMPARI by looking at a business in its broader

context.


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12.

SWOT ANALYSIS

STRENGTHS

Customer service

Dedicated, enthusiastic staff

Skills and experience

Teamwork

WEAKNESSES

Limited capital base

New brand

Location of business

OPPORTUNITIES

Growing construction sector

Huge shortage of liquidity in the

market

Tapping into South African financial

markets

THREATS

Regulatory changes and

bottlenecks

New players with financial muscle


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13.

BASIC STAKEHODERS INVOLVED AND THEIR MOTIVES

13.1.

PROPERTY HOLDERS

These are entrepreneurs who own real or financial assets and are in need of working capital and/or

startup capital. Their motive is to raise finance through entering into a REPO with Ratisson

Finance.

13.2.

REAL ESTATE AGENTS

These are property sales agents whose mandate is to either buy or sale properties on behalf of the

property holders or Ratisson Finance.

13.3.

SECURITIES EXCHANGE COMMISSION

The Securities and Exchange Commission of Zimbabwe was established through the enactment of

the Securities Act (Chapter 24:25). Section 3 of the Act provides for the establishment of the

Securities and Exchange Commission which is the regulatory body for the securities and capital

markets in Zimbabwe. The mission of SECZ is to provide an optimal regulatory environment for the

protection of investors and the sustainable development of capital markets for national economic

growth.

13.4.

RESERVE BANK OF ZIMBABWE

The products provide by Ratisson Finance can be classified under financial assets. In Zimbabwe

the Reserve Bank of Zimbabwe oversees the financial system. Its role is to promote and maintain

the safety and soundness of the financial system through proactive and rigorous regulation and

supervision in line with international best practice.

One of the core functions of the Reserve Bank of Zimbabwe is to promote financial stability. The

Reserve Bank is also empowered to register and supervise asset management companies, and

moneylending institutions, following the invocation of Section 3(3) of the Banking Act [Chapter

24:20] in March 2005.


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13.5.

SHAREHOLDERS

A shareholder is an individual or institution (including a corporation) that legally owns a share of

Ratisson Finance. Shareholders are the owners of Ratisson Finance. Their motive is to see their

value grow in the business and realize their expected returns.

13.6. BANKS AND OTHER FINANCIERS

These are the lenders to Ratisson Finance. There are interested in ensuring that Ratisson Finance

is financially sound and able to service its debts. They also follow up on the various covenants to

ensure that Ratisson Finance is in compliance.

13.7. CREDIT RATING COMPANIES

These may be engaged by Ratisson Finance to give an overall credit rating and or investment

grade of the firm. The importance of a credit rating when seeking funding locally and internationally

cannot be underestimated. Ratings boost investor confidence and help attract favorable terms and

conditions for funds borrowed.

13.8.

FINANCIAL SERVICES BUREAU

These will be helpful in providing Ratisson Finance with information about credit worthiness of

prospective clients. Conversely Ratisson Finance will also be required to furnish the same

information the Bureau.

13.9.

ZAMFI

Ratisson Finance’s investments are mainly to the microfinance sector. The Zimbabwe Association

of Microfinance Institutions (ZAMFI) is the membership-based umbrella body for microfinance

institutions in Zimbabwe. Most of its activities involve lobbying and advocating for a conducive

regulatory framework, and building the capacity of the sector. ZAMFI was instrumental in leading

the earlier research and promotion of ZMWF, and has provided logistical and administrative

support during the start-up phase. ZAMFI's Executive Director acts as one of the Trustees on the

ZMWF Board of Trustees. ZAMFI's role is leading the revamping of the regulatory environment by

turning the National Microfinance Policy into an Act of Parliament, and helping to introduce new

and needed initiatives like rural microfinance, housing microfinance and value chain management.


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14.

APPENDIX

14.1.

3 YEAR STRATEGY

14.2.

FINANCIAL PROJECTIONS

14.2.1. Balance Sheet

14.2.2. Income Statement

14.2.3. Cash Flow Statement

14.2.4.

Assumption s

14.3.

ORGANOGRAM


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ORGANOGRAM

EXECUTIVE CHAIRMAN

GENERAL MANAGER

ACCOUNTANT

ASSISTANTACCOUNTANT

BACK OFFICECLERK

SENIOR LOANOFFICER

LOANSOFFICER LOANS OFFICER

MARKETING

AND PUBLICRELATIONS

OFFICER

Micro Finance Business Plan and Projections

Documents

Transcript of Micro Finance Business Plan and Projections