News / National
Mnangagwa's son says Zimbabwe banks no longer offering funding beyond 2025
09 Oct 2023 at 19:26hrs | Views
Deputy Minister David Mnangagwa, responsible for Finance and Investment Promotion, has revealed that banks are no longer extending long-term funding options beyond 2025, coinciding with the planned conclusion of the multiple currencies system.
In Zimbabwe, businesses are clamouring for legislation that secures the continued use of foreign currencies, especially the US dollar, beyond 2025. Nevertheless, the government has yet to provide any assurances, resulting in widespread uncertainty. The diminishing value of the Zimbabwean dollar against major currencies has led to its rejection in the market. Under the existing regulations, foreign currency use is permissible until 2025, which hampers businesses' ability to engage in long-term planning.
Mnangagwa addressed these concerns during the Zimbabwe Association of Pension Funds Principal Officers and Chairpersons Convention. He mentioned that Finance Minister Mthuli Ncube is actively addressing this issue and reassured participants that there is no need to panic.
According to data from the Reserve Bank of Zimbabwe (RBZ), loans in Zimbabwe experienced a substantial increase, rising from ZWL$1.29 trillion in December 2022 to ZWL$10.19 trillion by the end of June. This surge was primarily driven by the growth in foreign currency loans, constituting 94% of the total loan portfolio, distributed across various sectors such as agriculture (17.48%), distribution (14.19%), manufacturing (12.24%), mining (11.78%), and others.
Joseph Mverecha, the Head of Business Strategy at AFC Commercial Bank, stressed the critical importance of maintaining macroeconomic stability for sustainable growth and industrialization. He advocated for an extension of the multi-currency system until 2030 to instil economic certainty and stability. Mverecha also suggested that the government should build foreign currency reserves, possibly by accumulating gold and foreign exchange (forex). He highlighted the need for consistent policy implementation, credible macroeconomic forecasts, and a stable exchange rate to restore public confidence, especially considering the diminishing value of the Zimbabwe dollar. Additionally, he recommended lowering interest rates, reducing statutory reserves, and implementing a pooled facility for smaller banks to encourage borrowing and lending.
In Zimbabwe, businesses are clamouring for legislation that secures the continued use of foreign currencies, especially the US dollar, beyond 2025. Nevertheless, the government has yet to provide any assurances, resulting in widespread uncertainty. The diminishing value of the Zimbabwean dollar against major currencies has led to its rejection in the market. Under the existing regulations, foreign currency use is permissible until 2025, which hampers businesses' ability to engage in long-term planning.
According to data from the Reserve Bank of Zimbabwe (RBZ), loans in Zimbabwe experienced a substantial increase, rising from ZWL$1.29 trillion in December 2022 to ZWL$10.19 trillion by the end of June. This surge was primarily driven by the growth in foreign currency loans, constituting 94% of the total loan portfolio, distributed across various sectors such as agriculture (17.48%), distribution (14.19%), manufacturing (12.24%), mining (11.78%), and others.
Joseph Mverecha, the Head of Business Strategy at AFC Commercial Bank, stressed the critical importance of maintaining macroeconomic stability for sustainable growth and industrialization. He advocated for an extension of the multi-currency system until 2030 to instil economic certainty and stability. Mverecha also suggested that the government should build foreign currency reserves, possibly by accumulating gold and foreign exchange (forex). He highlighted the need for consistent policy implementation, credible macroeconomic forecasts, and a stable exchange rate to restore public confidence, especially considering the diminishing value of the Zimbabwe dollar. Additionally, he recommended lowering interest rates, reducing statutory reserves, and implementing a pooled facility for smaller banks to encourage borrowing and lending.
Source - pindulo
