HARARE — The Central African Building Society (Cabs) is cushioned against non-performing loans given to youths as they were secured by a youth council’s shareholding in Old Mutual Zimbabwe, an official said.
Nearly 72% of the loans disbursed by Cabs to the youth under the Zimbabwe Youth Council (ZYC) since 2009 are non-performing, and OMZ deputy chief executive, Zomunoda Chizura said the loans were against the council’s shareholding in the company.
ZYC, a quasi — government institution which was established by an Act of Parliament, has a 2,5% shareholding in Old Mutual Zimbabwe as part of the company’s empowerment agreement, which in 2009 was worth $10 million and the loans were availed against its shareholding.
“As far as Cabs is concerned, that position is fully secured by that share certificate although the share price since then has gone up by about 20%,” Chizura told analysts at the firm’s briefing last Wednesday.
The loans were being disbursed under the Youth Development Fund launched by government in 2006 as a revolving fund.
Earlier this week youth minister, Francis Nhema said that youths were failing to repay the loans after each of the country’s 10 provinces were allocated $1 million. Some youths were changing their phone numbers and addresses to avoid repaying the loans, he said.
“When you have been given money you should repay so that others can benefit,” Nhema said.