Delma Lupepe accuses banking sector over industry collapse

PROMINENT Bulawayo businessman Delma Lupepe has accused the banking sector of contributing to the closure of companies through "punitive" lending rates that make it difficult for firms to pay back the loans.

Following the introduction of the multicurrency system in February 2009, the capitalisation levels of most businesses dropped to zero, forcing firms to borrow from banks.

This, Lupepe said, saw some of the businesspeople ceding their properties as collateral hoping to make a quick turnaround.

He said banking institutions such as CBZ, CABS, NMB, ZB Bank and Tetrad, who currently attach company properties over unpaid loans, played culprit when they offered loans at high interest rates.

"After dollarisation, we woke up one morning and we needed the US dollars and nobody had a cent in US dollars and the banks took advantage of that. They charged punitive interest rates, which are impossible to pay back," said Lupepe who has also not been spared from the painful bite.

"The Reserve Bank of Zimbabwe (RBZ) itself admits that those interest rates that were being charged in 2009, the amounts borrowed under those interest rates are impossible to pay back and the result is what is happening now - properties being sold."

Since last year auctioneers, estate agents and valuers have been making a killing each week - swooping on struggling firms and selling their properties to recover unpaid loans.

Some of the firms whose properties have gone under the hammer are Pyvate Investments, Sunrise Trading, Suspension Centre, Eyeland Trading, and Daytona Beach Marketing.

According to the Confederation of Zimbabwe Industries, (CZI) capacity utilisation in the manufacturing sector last year declined to 36,3 percent from 39,6 percent in 2013.

Two weeks ago, RBZ deputy governor Kupukile Mlambo said the credit risk and the level of non-performing loans in the country were at the moment very high.

He said this was due to over-lending and very high interest rates, as high as 40 percent per annum by banks to the private sector and individuals when the country adopted a multicurrency system.

Lupepe, who ran the now defunct Amazulu Football Club and the closed Merlin Clothing Limited, said despite the RBZ recognising that banks at the time of dollarisation charged exorbitant interest rates, the government was yet to give a moratorium to stop banks attaching company properties to give them a chance to revive.

Given new equipment, he said, it would take about 12 months to resuscitate the local manufacturing industry and compete with international suppliers.

"If property that you used to secure those loans is sold how do you then secure further funding going forward when you're reviving industry as I wouldn't have collateral anymore? Fortunately some of us we have been in business for quite a long time, so we did hedge against things like this," he said.

"We refused to lie down and die. We'll survive and change our business models if industry isn't being assisted."

He said it was disheartening that some people were of the notion that the closure of factories, especially those owned by indigenous people, were due to mismanagement.

"There is this tendency by black people of despising their own black people accusing us industrialists of destroying companies.  If you're saying we mismanaged companies and destroyed them why is it that even white-owned companies or industries are also affected in the same way that we're affected?" said Lupepe.

"Cotton Printers for example, is also closed. It's a white-owned company, owned by a big group, Meikles. Look at Archer Clothing, a white-owned company and Security Mills. They're all facing problems. As industry we're all affected because we're operating in the same economic environment.

"How can I put up my personal property as security and then go ahead and mismanage the same business? How did I buy the business in the first place when I wasn't a good businessperson?" said Lupepe.