Banks must shape up

If we are going to increase our local productive capabilities we have to invest more in production and not consumption. That is not rocket science.

The RBZ report on loans by local  banks for 2016 says:

“Of the $3,69 billion loaned by banks in 2016, a huge chunk (28,7%) went to individuals, agriculture got 16,7%, distribution (15,3%), services (14,95%) and manufacturing sector at 10,4%.

The mining sector received 4,5%, construction (3,5%), financial firms (2,11%) and 1,5% of the loans went to the communication sector.”

Agriculture and mining are the key drivers of growth and yet we are lending more to individuals. Of course there remains some systemic risk especially in agriculture with regards to security of tenure, but we must be creative. In my opinion these two sectors should make up at least 50% and then manufacturing next.

Banks should be required to invest in these sectors as a matter of priority.

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Post published in: Business