ABOUT THE COMPANY
Izwe Africa Group is an established financial credit provider operating in Ghana, Kenya, Mauritius, South Africa and Zambia. Initially established in South Africa in 2004, Izwe began to expand into the rest of Africa with the Zambian “Izwe Loans Zambia PLC” branch established in 2008. Since then the Group has experienced a steady, managed upward progression and developing a leading cashless business.
The Group’s mission is to enable individual’s lives by providing them with useful financial solutions. The Group’s financial model is to service both the formal and informal working markets with secured and unsecured loans, saving products and simplified investment schemes. Moreover, Izwe is committed to continued innovation to meet its customers’ long-term financial goals by giving them a real opportunity to generate fiscal wealth through smart and secured investments.
REVIEW OF THE BUSINESS ENVIRONMENT
The Covid-19 pandemic continued being a major trading impediment, affecting the financial sector in many ways. In spite of this challenge, Izwe Loans Zambia Plc “Izwe” continued to show strong growth in business results and customer numbers during the financial year of 2021. “Support through the Targeted Medium-Term Refinancing Facility (TMTRF) by the Bank of Zambia, coupled with the normalization of collections, helped to sustain a reasonable trading environment especially in the second half of the year and Izwe was able to capitalize on this stability which increased demand for its products, culminating in record sales during the fourth quarter of 2021” (Abridged Financial Statements, 2021).
FINANCIAL PERFORMANCE
In the year under review Izwe Loans achieved a 128% increase in its profit after tax of ZMW111.2 million from ZMW 48.8 million in 2020. The improved financial performance was attributed to the increased number of loans disbursed, effective management of operating costs and a significant reduction in the overall weighed average cost ‘WAC’ of funding. According to the Abridged Financial Statement, 2021 the gross revenue incurred a marginal reduction of 4% when compared with 2020 at ZMW342.1 million. This was due to the pass-on effects on product pricing following the access to concessional funding.
In the 2020 financial period Izwe Loans put in place effective operating strategic changes that resulted in a beneficial change of their operating expenses from ZMW123.4 million to ZMW100.2 million in 2021 which represented 19% reduction. Moreover, the impairment loss on the loans issued improved loans from an expense of ZMW8.4 million in 2020 to a credit of ZMW15.7 million in 2021. This result was significantly driven by the enhanced repayments from customers through Government remittances and the improved credit quality of the Izwe loan book.
According to the Abridged Financial Statement, 2021 good financial performance was recorded for the year resulted in a year-on-year increase in Earnings Per Share (EPS) from ZMW0.47 recorded in 2020 to ZMW1.07 in 2021. Furthermore, the net loans and advances grew by 16% to ZMW712.1 million from ZMW611.5 million in 2020. The increase in loans disbursed in the second half of 2021 lead to the overall growth in the earnings asset of the company. In the course of the period, the company drew additional funds from the Targeted Medium-Term Refinancing Facility ‘TMTRF’ with increased the borrowings and corporate bonds from ZMW449.0 million in 2020 to ZMW528.8 million in 2021. Foreign exchange losses reduced to ZMW13.1 million (2020: ZMW31.8 million), and this was due to the business’ decision to limit its foreign currency exposure and the appreciation of the Kwacha against the major international currencies (Abridged Financial Statement, 2021).
FUTURE BUSINESS OUTLOOK
The financial year ahead looks promising for Izwe Loans as the domestic macro-economic activities are indicting signs of recovery coming after the recession of 2020 occasioned by the adverse impact of Covid-19 pandemic. Overall, Zambia’s Real GDP is projected to grow by 3.5% in 2022 by on the strong performance in the mining, finance and insurance sectors. Izwe Loans is well placed to leverage the new growth prospects in 2022 especially in the mining sector due to the new SME products that were introduced in 2021 financial year.