Microfinance Institution (Money Lenders)

Business Plan

Clement Chibanga, Muyunda Simandi & Crispin Sanjase

(Entrepreneurs)

Mezya Financial Services Limited

Livingstone, Zambia.

Contact details: +26097 9 568 292

1
1.0 EXECUTIVE SUMMARY

Mezya Financial Services Limited is a registered under the company registration

Act 10 of 2017 as a legal entity operating to offer money lending services to its
esteemed customers in Livingstone district. The business is owned by three
business partners named Clement Chibanga, Muyunda Simandi and Crispin
Sanjase. Mr. Clement Chibanga is currently the Chief Executive Officer (CEO).
Being the CEO, he is tasked with decision making and management function
such as planning, organizing, controlling, coordinating, directing and general
leadership for the business. Once recapitalised, the business is projected to be
profitable with high growth prospects. All the capital injection requirements will
be sourced by means of equity or credit acquisition from the money market.
Livingstone was deliberately chosen as the place for the project
commencement due to, among other reasons, reasonably big population size
resulting in high numbers of people in need of financial solutions. Livingstone has
a reasonable amount of competitive institutions, a fair social stratification which
provide a conducive environment for learning lessons and improving
performance.

The money lending business is indeed vast and there are many players in the
industry, hence the competitive nature. The fact that the industry is competitive
in most cities does not in any way cause entrepreneurs who have keen interest
in the industry to back out. The firm will devise a number of innovative strategies
to become significant and robust. The firm will lend out medium-term (6 months
loans) to short-term (1 to 3 months loans) loans targeting members of the private
and public sectors, institutions, departments and established individuals at the
lower interest rate of 15% per month. Our strategic location and good customer
care will give us a competitive advantage to enjoy a fair share of the market.

It is expected that the demand for financial solutions will not plummet any time
soon considering the state of political and economic drivers affecting the
circulation of money in the economy. As a means to benefit from this demand,
the firm will continue to explore all available market around the city where our
business is located. The firm will focus mainly on the unserviced private sector
with net disposable income of more than K2,000.00 per month who are either in
contractual or permanent jobs . The firm will also focus on small stable businesses
existing for more than 6 months, which are in possession of valuables such as
houses, cars or household goods which can be used as collateral. The firm will
also target to sign Memorandum of Understanding (MoU) with private and public

2
 institutions to facilitate remittance of collected funds to Mezya Financial Services
Limited. This will reduce the risk associated with loan repayment. We are
confident that we will be able to maximize profits in our business.

Our plan is to position Mezya Financial Services Limited to become one of the
leading brands in the money lending industry in the whole of Livingstone, and
also to be among the top 5 money lending firms in Zambia within 10 years of its
existence.

We accept that this appear to be a very ambitious dream but we are optimistic
that we have what takes to realise it based on the outcome of the market
research and feasibility studies conducted. We are also enthusiastic and
confident that Livingstone is the right place to lunch this type of business before
spreading to other cities across Zambia. All things being equal we anticipate to
expand and roll out this plan for our business in January 2020.

This business plan looks at all the requirements needed to increase and improve
operation of a project with regard to cost of fixed assets, cost of labour,
machinery and equipment, cost of overheads such as rent, electricity,
marketing, advertisement, branding, staff development and other hidden costs.
All things being equal, we are expected to be commissioned the expansion of
our business by January 2020.

2.0 OUR MISSION STATEMENT

To build a financial solution entity that will precisely meet and exceed the needs
of our customers and potential customers, through strategic provision of
accessible, affordable and reliable financing thereby becoming a lead in the
sector through innovation, creativity and capacity development.

3.0 VISION
To be the best money lending business in Livingstone and among the 5 leading
money lending companies in Zambia within our 10th Anniversary.

4.0 CORE VALUE

❖ Integrity
❖ Professionalism
❖ Excellence
❖ Commitment
3
 ❖ Honesty
❖ Customer care
❖ Ethical
❖ Responsible

5.0 GOALS

❖ To provide guaranteed affordable financial solution to our target group

❖ To create a robust customer care system that thrives on feedback to improve
operation of the business
❖ To a create a financial solution that is efficient and rewarding with a shortest
turn-around time
❖ To provide a financial solution that is responsive to all social groups including
youths and women

6.0 OBJECTIVES

Mezya Financial Services Limited will put a number of objectives to serve as

performance yardsticks. These objectives will be smart in nature and are
expressed in terms of short and long term as follows;

6.1 SHORT TERM

❖ To create 3 jobs at inception
❖ Create accounting systems that provides accountability and
transparency
❖ To attain annual sales of K857,000 by December 2020
❖ Realizing a Net Profit of K510,566 by December 2020

6.2 LONG TERM

❖ To sign MOU with government to facilitate remittance
❖ To open a new branch in Lusaka and Solwezi by December 2021
❖ Creation of Eight (8) new jobs by December 2021
❖ To penetrate the market and envelope salaried employees on payroll
and offering salaries advances and long-term loans by July 2021

4
7.0 BUSINESS LOCATION

We are located in the central business district of Livingstone at Plot No. 17,
Maambo, Off Airport, Livingstone. This is a strategic location which is accessible
by a huge human traffic. The area is visible and has enough parking spaces ideal
for this business.

This strategic location is projected to give us a competitive advantage.

8.0 BUSINESS DESCRIPTION

Business Name : Mezya Financial Services Limited

PACRA Registration No. : 1018727170
Website : www.mezyafinancialservices.com
Business Director : Mr. Clement Chibanga
Business Phone No/ : +260979568292,
Email : [email protected]
Business Address : 17 Maambo Way, Livingstone
Business Bank : ZANACO
Business Bank Account No. : 5701163500143
TPIN : 1018727170
Business Legal Document : MONEY LENDERS CERTIFICATE

9.0 ECONOMIC BENEFITS

This money lending business will have a number of trickle-down benefits to the
economy of Zambia, especially when we expand to different districts. The
following are some of the projected economic benefits that will accrue.
❖ Job creation
❖ Tax contribution to the Republic of Zambia
❖ Contribution to the Gross Domestic Product (GDP)
❖ Creation of propensity for other entrepreneurs to jump into the band wagon
and emulate us
❖ Provision of capital injection and elevating funds for families in the community

5
10.0 WHY US/KEYS TO SUCCESS

There being a number of competitors on the market why would a customer

choose our services instead of choosing our next door neighbour?

Our keys to success and why we believe we will win customers are as follows:-

❖ We will offer the lowest interest rates to our valued customers at 15% per
month
❖ We will offer cash within minutes and do so in a friendly and flexible manner.
Mezya Financial Services Limited will make customer care its number one
objective.
❖ Customer feedback. We will take seriously into consideration all customer
complaints and compliments which will be used as key information in our
future business decisions. This “bottom up” management approach will lead
us to continuously improve our business in a competitive market. The
customer will be the reason for our existence.
❖ We will devise a unique sales and marketing strategy

11.0 SERVICES

We will be offering money lending services to our esteemed customers at a

competitive rate. We intend to offer cash upon collection of collateral, or
secured under an institutional MoU, at 15% interest rate.

12.0 MARKET ANALYSIS

The demand for money lending services in Zambia is very high and expected to
be on the upswing for the foreseeable future. Although there are a number of
players on the market to carter for the growing demand, customers are not
entirely satisfied due to a number of reasons. One such reason is exorbitant
interest rates especially by some well-established firms in the industry. This has left
many customers paying for up to more than 50% interest rates. Further, these
rates are not explained in detail to the customer. Secondly, there is the issue of
bureaucracy. More often than not, a number of businesses that offer this service
do not offer cash on the spot. Customers’ are made to wait say, for a day or
two. Thirdly, most players on the market target civil servants with long tenured

6
employment. This has resulted in the exclusion of employees from the private
sector. Fourthly, the sector does not often consider small established and
profitable private businesses owned by women and youth. As Mezya Financial
Services Limited we understand the financial need and potential present in the
mentioned groups. We therefore want to come in and make customers lives
easier in a friendly and professional manner. With a good management system
that puts costs to the minimal, we project to be profitable within a few months of
our birth.

12.1 MARKET SEGMENTATION

We are targeting individual clients in public and private companies as well

as established businesses as individuals with net monthly income above
K2,000.00 at the inception. Plans are afoot to service even corporate
clients signed under MoU (from remittance purposes) within three years of
our establishment.

12.2 MARKET TREND

This business is increasing steadily in Zambia, hence the need for

advancement in marketing techniques so as to remain competitive.
Mezya Financial Services Limited intends to be innovative and avoid
applying “yesterday’s methods to solve today’s challenges”

To remain at the top, we intend to use modern technological

advancements e.g. by allowing clients place inquires and orders via the
internet. Our loyal repeat customers will be allowed to get cash via mobile
money, bank transfer, without necessarily coming to our offices. Further,
we intend to reduce unnecessary paper work, delays in processing our
loans. Our dedicated team of employees will see to it that all the loans
are processed and disbursed within an objective timeframe of 30 minutes.

12.3 PRICING STRATEGY

Price being one of the four Ps of the marketing mix plays a key role in any
business survival and growth. Mezya Financial Services Limited will
strategically offer a competitive but affordable lending rate to its
esteemed valued customers. Our pricing /rate will be dependent on what

7
 is obtainable on the market but will be slightly reduced in comparison to
what competitors will offer.

At inception, we intend to put all our lending services at a rate of 15%

which is way below the official lending rate for the country.

13.0 SALES AND MARKETING STRATEGY

The business world is highly competitive and only businesses that have strategies
in place survive. We as Mezya Financial Services Limited are alive to this fact and
we intend to put in place a number of sales and marketing strategies.

The following will be some of our sales and marketing strategies:-

❖ Directly involve our existing customers in widening our customer base by
referring prospective customers. This will be possible when we provide a
service that exceed the expectation of clients.
❖ Conduct outreach sales and advertisement sessions with prospective
customers.
❖ Use of the internet through various on-line platforms such as Facebook,
WhatsApp, twitter and many others to advertise the business. More than 75%
Zambians own cellular phones, and have access to mobile internet. We
believe we will reach more people online.
❖ Offer special services to loyal repeat clients e.g. if a client is consistent for a
certain period, they win a bag of mealie meal, sugar, cooking oil etc.
❖ Listing our business in Yellow pages/directory
❖ Use of flyers in strategic places where our potential customers can see what
we will be offering
❖ We intend to also advertise our business on local radio in the targeted
area/market

14.0 BUSINESS OWNERSHIP

Mezya Financial Services limited will be owned by Mr. Clement Chibanga, Ms

Muyunda Simandi, Mr Crispin Sanjase and any other shareholders who will come
on board. These will constitute the board of directors. Mr Chibanga will manage
the operation of the business as Chief Executive Officer (CEO) who will also act
as Director for the business. He has vast experience in the management and
coordination of businesses and projects with financing orientation. He has

8
 passion in this type of business and will be assisted by a team of qualified and
similarly experienced directors and employees.

The Director will carry out all management functions of the business and make
strategic business decisions. At Mezya Financial Services Limited, the customer is
part of management. All customer concerns, it be complements or complaints
will be used by the company in business decisions. This will be aimed at
continuously improving the way we run the business.

15.0 HUMAN RESOURCES

At inception, we will employ three (3) workers to help run the business. These will
be qualified and competent workers from recognized institutions.

❖ Loan Officer x 2
❖ Cleaner x 1

15.1 LOAN OFFICER

Duties and Responsibilities
❖ Welcoming and greeting customers
❖ Processing all loans in an efficient and effective manner
❖ Assessing and advising customers if they qualify for the services
❖ Analysing the risks involved from different customers
❖ Making follow ups on debt recovery on possible defaulting customers
❖ Perfecting collateral checks
❖ Perfecting and instituting KYC
❖ Issuing and receipting cash
❖ Performing banking transactions on behalf of the company
❖ Initiating and following up on all cases requiring legal actions
❖ Any other duty as assigned

QUALIFICATIONS
❖ Full Grade 12 Certificate
❖ Professional ZICA, Business Administration Diploma or ACCA level II

9
 ATTRIBUTES
❖ Flexibility
❖ Innovative
❖ Able to work under pressure

15.2 CLEANER
Duties and Responsibilities
❖ Ensuring the working environment is spotlessly clean
❖ Doing daily errands for the business e.g. collection of mail, buying daily
consumables etc.
❖ Demonstrate client courtesy
❖ Any other duties as assigned

QUALIFICATIONS:
❖ FULL GRADE 12 CERTIFICATE

EMOLUMENTS / MONTH

DESIGNATION QTY
QUALIFICATION SALARY (K) TOTAL (K)
Loan Officer 02ZICA Professional, 2,800 5,600
ACCA Level 2 or
Business
Administration
Diploma Level
Cleaner 01 Grade 12 School 1000 1000
Certificate
TOTAL WAGE BURDEN / MONTH 6,600

16.0 RISK SENSITIVITY

Money lending like any other business is susceptible to a number of possible

business risks, among them being the following:-
❖ the risk of defaulting by customers
❖ high competition with big well-established players
❖ closure of companies which provide business to the MFI

10
 However, we will devise top notch strategies to put such fears at bay. We are
not afraid to take the risks of expanding this business. To avoid suffering shock of
defaulting customers, we will collect collateral (liquid assets of value more than
outstanding balance) from clients and plans are underway to commence
signing MOUs with institutions as we target salaried employees through the
payroll system. Through these strategies, our business will blossom and flourish
with a year of its expansion.

In response to the market cut-throat competition, we as Mezya Financial Services

Limited are not shaken, we believe we will introduce more choices for the
customer. Our value for money services will compel customers to consider
choosing us as their number one financial solution partner.

17.0 COMPETITOR / SWOT ANALYSIS

We face a number of competitors in the targeted market some of whom are big
and well established. Therefore, we have conducted a SWOT analysis to assess
the business environment.

17.1 SWOT ANALYSIS FOR US

STRENGTHS WEAKNESSES
▪ Strategically located ▪ We are new in the market
▪ Good sales and marketing ▪ We can’t lower the rate
strategy further
▪ Lowest lending rates in ▪ High cost of rentals
Zambia
▪ Qualified and experienced ▪ Limited capital base
staff
OPPORTUNITY THREATS
▪ Continuous demand for cash ▪ Possible risk of defaulting
customers
▪ Room to grow the business ▪ Possible economic down
turn that may affect
borrowing power of
customers e.g. job losses
▪ Most player concentrate on ▪ Presence of competitors
civil servants at the expense of with strategies to swallow
lucrative private sector upcoming businesses

11
 Our quality of service, strategic marketing and advertisement, good customer
care, excellent interest rates and flexibility will make us the number one choice
to our customers. In achieving this, the firm will invest in training of its staff in
handling customers and to improve creativity and innovation in the execution of
duty. We are, therefore, not afraid to take the business risks of entry into this
competitive but lucrative sector. Moreover, the demand for cash is ever on the
increase and despite many players on the market, customers still need more
players on the market especially those with services catering for the unserviced
groups in society such as employees of private businesses and established
businesses.

18.0 OPERATING PLAN

Mezya Financial Services Limited intends to inject a total sum of K250,125 into the
lucrative business. All things being equal, the business will have reaped healthy
profits in the region of K510, 566 by December 2020

This is our short term strategic objective and with good management in place,
this will be actualized and realized.

Our interests rate will stand at 15%, the lowest ever in Zambia. For this reason, we
project to have a huge clientele base, especially in year two once we open two
more branches in Lusaka and Solwezi.

18.1 OPERATING HOURS

MONDAY TO FRIDAY

• From 08:00 hours to 17:00 hours

SATURDAYS

• Open from 08:30 hours to 15:00 hours

SUNDAYS

• Closed for business

12
 TOTAL WORKING DAYS FER MONTH

• 26 days

TOTAL WORKING HOURS PER DAY

• 9 hours from Monday to Friday

• 7 hours on Saturday

TOTAL WORKING HOURS PER MONTH

208 hours i.e. (9 x 5 x 4 weeks) + (7 x 4)

18.2 FIXED ASSET REQUIREMENTS

ITEM ESTIMATED COST (K)

Computers x 2 6,500
Furniture 3,500
Fridge 900
Air conditioner 6,000
Photocopying/scanning machine 3,500
Fire extinguisher 650
TOTAL 21,050

18.2.1 DEPRECIATION ON FIXED ASSETS PER ANNUM

ITEM COST DEPRECIATION DEPRECIATION NETBOOK VALUE

RATE COST
Furniture 3,500 15% 525 2,975
Equipment 17,550 15% 3,510 14,040
TOTAL ANNUAL DEPRECIATION 4,035

Depreciation is calculated by the straight line method. The total annual

depreciation cost is K4, 035. All other assets, except furniture have been classified
in the depreciation schedule above as simply equipment and their total value is
K17, 550. Even in other statements e.g. statement of financial position they are
classified as such.

13
 18.3 Administrative Expenses
Mezya Financial Services Limited App. I
PROJECTED OPERATING EXPENSES
Operational Expenditures
Advertising 6 000
Bank charges and interest 4 289
Depreciation 4 035
General expenses 2 847
Insurance and Licences 17 269
Legal and professional fees 21 539
Motor car running expenses 19 926
Office expenses 5 902
Postage and Telephone 9 299
Printing and stationery 9 564
Rent 36 000
Repairs and Maintenance 11 215
Salaries and Wages 79 200
Sanitary, water and electricity 7 591
Security 8 084
Staff welfare 5 422
Subscription 9 280
Taxation 22 431
Transport 32 261
Total expenditure 312 154

Some of the items that may not have been factored into will be financed
by the 5% contingency that has been allocated in the total project cost
table in (18.6)

14
18.4 PROJECTED SALES

MONTH ONE MONTH TWO

197, 000 x 15% 226,550 x 15%

197,000 + 29, 550 (interest) 226,550 + 33,982.5 (interest)
= 226,550 = 260,532.5

MONTH THREE MONTH FOUR

260, 532.5 x 15% 299,612 x 15%

260,532 + 39,079.9 (interest) 299,612 + 44,942 (interest)
= 299,612 = 344,554

MONTH FIVE MONTH SIX

349,554 x 15% 396,237 x 15%

344,554 + 51,683 (interest) 396,237 + 59,436 (interest)
= 396,237 = 455,673
MONTH SEVEN MONTH EIGHT

455,673 x 15% 524,024 x 15%

455,673 + 68,351 (interest) 524,024 ||+ 78,604 (interest)
= 524,024 = 602,628

MONTH NINE MONTH TEN

602, 628 x 15% 693, 022.2 x 15%

602,628 + 90,394.2 (interest) 693, 022.2 + 103, 953 (interest)
= 693,022.2 = 796,975.2

MONTH ELEVEN MONTH TWELVE

796,975.2 x 15% 916, 522 x 15%

796, 975.2 + 119,546.3 (interest) 916,522 + 137,478 (interest)
= 916, 522 = 1,054,000

Our projected annual sales before expenses will be K1, 054,000. As can be seen,
this business will reap healthier profit margins with the passage of time. The actual
revenue Generated Will be k857, 000 i.e. projected funds less cash injected (k1,
054,000 – k197, 000)

15
The net profit (after all expenses are deducted) will be calculated in the income
statement (profit & loss statement).

18.5 TOTAL PROJECT COST

ITEM ESTIMATED COS (K)

FIXED ASSETS REQUIREMENTS:
Furniture 3,500
Equipment 17,550

INITIAL WORKING CAPITAL REQUIREMENTS:

Salaries 6,600
Purchases – 1st two months 1,300
Overhead costs/month 6,900
Certifications/police/court clearance 3,300
Registration & business name/PACRA 958
Cash injected for lending @ 15% 197,000

PRE-OPERATING EXPENSES:
Painting of premises to suit for business 360
Consultation of business planner 300
Other 250
TOTAL PROJECT COST 238,018
Add 5% contingency 11,910.9
TOTAL FUNDS NEEDED TO COMMISSION THE PROJECT 250,129.00

Other smaller expenses that may have been omitted will be absorbed in
contingency funds.

16
 18.6 FINANCIAL PROJECTIONS

18.6.1
Mezya Financial Services Limited
Statement of Comprehensive Income
For the year ending 31 December 2020

Notes
K

Revenue App. I 856 999

Total Operating income App. I 856 999

Administrative expenditure App. II (312 154)

Profit before taxation 544 846

Taxation App. I (34 280)

Profit for the year 510 566

INCOME STATEMENT INTERPRETATION

Mezya Financial Services Limited, all things being equal, will be a very viable
financial services company with excellent profit margins. After a year one of
trading, we will create a net profit of K510, 566 representing 60% of total annual
sales.

The business will be able to pay its financial obligations on time and still remain
operational. We anticipate in year two to open, two branches, one in Lusaka
and another in Solwezi as these are key markets. We want to target borrowers in
these towns.

All the expenses in the income statement above are based on an annual
calculation. However, salaries and overheads are multiplied by eleven months
because a one month provision was made in the total project cost table.
17
 Depreciation is calculated only once annually. We will aspire to keep costs as
minimal as possible.

18.6.2
Mezya Financial Services Limited
Statement of Financial Position
As at 31 December 2020
ASSETS
Non-current assets K

Property, plant & equipment 17 015

17 015
Current assets
Trade and other receivables 83 841
Bank and cash balances 926 459
1 010 300

Total assets 1 027 315

EQUITY AND LIABILITIES

Capital and reserves
Share capital 500 000
Revenue reserves 510 566

1 010 566

Current liabilities
Payables and accruals 11 250
Taxation Payable 5 499
16 749

Total equity and liabilities 1 027 315

18.6.3 CONCLUSION

Mezya Financial Services Limited is projected to be a profitable and

viable business in the money lending industry with the lowest interest
rate of 15% on the Zambian market. We anticipate attracting a
decent number of clients right at inception. This will be realized by
embarking on an aggressive marketing and sales campaign.

18
In the next three years we intend to start long term loans to salaried
employees. This is our strategic long term objective and will greatly
improve our cash. These will be non-collateral loans as we will be
deducting directly from the payroll. Other services that are on our
cards for the future also include salary advance services and home
improvement package.

All things being equal Mezya Financial services Limited is a business

that is worth taking the business risk to invest in. We are therefore not
afraid to take this giant step to ensure the company expands its
operations in January 2020. This is a bankable project.

19