Business / Companies
'Zim banks have no capacity to fund mines,' says BAZ
24 Jul 2014 at 17:56hrs | Views
THE banking sector has no capacity to meet financial requirements for the mining industry due to the liquidity crunch facing the economy, the Bankers Association of Zimbabwe president, Sam Malaba, said in Bulawayo on Thursday.
The mining sector needs more than $5 billion in the next five years to recapitalise operations.
"The banking sector deposits are slightly above $4 billion and 70 percent of the deposits are transitory in nature.
"On the other hand, the Minister of Mines and Mining Development (Walter Chidhakwa) has said the mining industry requires over $5,3 billion for recovery.
"It means the local banks are not able to meet the capitalisation needs of the mining sector in the country," said Malaba in a speech read on his behalf by the association's immediate past president George Guvamatanga during the Joint Suppliers and Purchasers Conference in the city.
The conference is running concurrently with Mine Entra.
Since the adoption of a multi-currency system in February 2009, the liquidity crisis has remained as one of the major challenges stifling efforts to stimulate productivity to competitive levels in the productive sectors.
Malaba said in light of the liquidity crisis in the economy, local mining houses could finance their operations through the issuance of corporate bonds, loyalty based financing and offtake contract financing among others.
In a report on the performance of the banking sector for the period ending March 31, 2014, the Reserve Bank of Zimbabwe said the banking sector deposits amounted to $4.82 billion while loans and advances were $3.64 billion, translating into loans to deposits ratio of 78.03 percent.
The monetary authorities said banks lending portfolio continued to be skewed towards consumptive lending.
Total loans as at December 31, 2013 stood at $3,08 billion and by the end of the first quarter, the figure increased to $3,6 billion.
Total deposits marginally improved to $4,89 billion as of March 31, 2014 from $4,73 billion by December 2013.
Net profit in the banking industry improved significantly during the period under review to $20,47 million from $4,46 million as of December last year.
Despite the challenging operating environment, RBZ said the financial services industry has generally remained stable.
Apart from transitory deposits, the banking industry remains characterized by limited inter-bank trading, general market illiquidity and limited lender of last resort function.
The mining sector needs more than $5 billion in the next five years to recapitalise operations.
"The banking sector deposits are slightly above $4 billion and 70 percent of the deposits are transitory in nature.
"On the other hand, the Minister of Mines and Mining Development (Walter Chidhakwa) has said the mining industry requires over $5,3 billion for recovery.
"It means the local banks are not able to meet the capitalisation needs of the mining sector in the country," said Malaba in a speech read on his behalf by the association's immediate past president George Guvamatanga during the Joint Suppliers and Purchasers Conference in the city.
The conference is running concurrently with Mine Entra.
Since the adoption of a multi-currency system in February 2009, the liquidity crisis has remained as one of the major challenges stifling efforts to stimulate productivity to competitive levels in the productive sectors.
In a report on the performance of the banking sector for the period ending March 31, 2014, the Reserve Bank of Zimbabwe said the banking sector deposits amounted to $4.82 billion while loans and advances were $3.64 billion, translating into loans to deposits ratio of 78.03 percent.
The monetary authorities said banks lending portfolio continued to be skewed towards consumptive lending.
Total loans as at December 31, 2013 stood at $3,08 billion and by the end of the first quarter, the figure increased to $3,6 billion.
Total deposits marginally improved to $4,89 billion as of March 31, 2014 from $4,73 billion by December 2013.
Net profit in the banking industry improved significantly during the period under review to $20,47 million from $4,46 million as of December last year.
Despite the challenging operating environment, RBZ said the financial services industry has generally remained stable.
Apart from transitory deposits, the banking industry remains characterized by limited inter-bank trading, general market illiquidity and limited lender of last resort function.
Source - BH24
