THE Reserve Bank of Zimbabwe (RBZ) is working on ways to encourage banks to disburse various loans it has launched, amid concerns that the financial institutions were reluctant to disburse them, an official has said.
BY MTHANDAZO NYONI
There have been growing concerns that potential beneficiaries of the central bank’s loans were failing to access them due to banks reluctance to disburse the soft loan packages.
Responding to questions from the floor during the Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter annual general meeting held in Bulawayo on Wednesday, RBZ Bulawayo regional office deputy director, Kasada Sibanda said they were aware of the banks’ reluctance in disbursing their loans.
“Yes, we are aware of the reluctance of banks disbursing these soft loans. I think the Reserve Bank is looking into ways and means of maybe using a different model so that we encourage our industry players to access those facilities since the banks are not giving as much as we want,” he said.
The central bank launched tourism support ($15m) and export finance facility ($70m) to support different sectors of the economy.
The lending rate for those loans is 7,5% per annum with tenor being 12 months for working capital and 36 months for capital expenditure. Industry players, however, said the cost of money was too high, advocating the central bank to further review interest rates downwards.
In response, Sibanda said the cost of money in the country was due to the risk premium.
“In the new dispensation we are hopeful that the risk premium which is a country risk, for us it has been quite high, (would be reduced). We are looking forward to have an engagement with the international community to reducing that risk therefore reducing the cost of money,” he said.
There has been concern that banks prefer Treasury Bills to lending due to attractive returns. Banks have adopted a cautious approach to lending as they want to reduce the level of non-performing loans (NPLs). Banks eye an NPL ratio of 5%. The default rate peaked to 20,45% in 2014, forcing government to create a special purpose vehicle, Zimbabwe Asset Management Company (Zamco) to buy bad debt from banks to free their balance sheets to be able to lend again.
As at December 31, Zamco had acquired NPLs amounting to $987 million.
RBZ said the acquisition of the NPLs had assisted banks to clean up their balance sheets so that they were better able to support the economy through provision of credit.