HARARE - Zimbabwe's banking sector says high political risk, cash, power and water shortages and the hold-up in the implementation of the global political agreement are hampering recovery of the economy. In the latest round of the banking sector’s financial reporting season, chairpersons of Kingdom Bank, Premier, CBZ, ZB Financial Holdings all reported an improving operating environment, but bemoaned the liquidity crunch and confidence problems. Bankers said the economy had expanded for the first time in a decade last year. Inflation that rose to more than 231 million percent in July 2008 declined to a deflationary level of 7.7 percent in 2009. Since the formation of a unity government the economy grew 4.7 percent, up from a decline of 10 percent in 2008. All bankers waxed lyrical about the introduction of the multi-currency system.
“After a decade-long decline, the Zimbabwe economy has been and continues to be on the mend following the implementation of the multi-currency system in February 2009,” Kingdom Financial Holdings Limited chairperson Sibusisiwe Bango said. “In addition to putting an end to rapid money supply growth and curtailing speculative activities, the multi-currency system directly contributed to the immediate containment of inflation by arresting rapid price movements,” she said. Zimbabwe is battling to reconstruct the economy that the government estimates contracted by nearly 50 percent from 2000-2008.
Bothwell Nyajeka, ZB Bank chairman, said there was need to pour more money into the economy to sustain the projected 7 percent GDP growth and 5.1 percent inflation in 2010.
“Achievement of the macro-economic goals will require among other things, the active participation of the financial services sector through a deliberate stimulus package that injects more liquidity into the sector,” Nyajeka said. “Such an approach will result in capital being distributed evenly throughout the economic sectors at more reasonable and sustainable prices.”
Luxon Zembe, chairman of CBZ Holdings said there was need for national unity of purpose, common understanding of economic imperatives and shared vision to consolidate the economic recovery. “The implementation the global political agreement followed by the spirited engagement of the international community will bear fruits as lines of credit and other pledged budgetary support materialises,” Zembe said. Zembe said the macro-economic policies enunciated through the 2010 national budget as well as the three-year budgetary framework and the medium term plan, augured well for economic recovery.
Premier Bank chairman Sengi Mlambo said while the multi-currency system had ushered in price stability and restored business confidence, “businesses were ill-equipped to meet their obligations with cost structures in general beyond what the environment and business levels could sustain. “The revenue bases were depressed for many businesses as demand for goods and services was low; and capital eroded, from years of hyperinflation, needed considerable injection,” Mlambo said. Zimbabwe’s banking sector has been in distress over the past decade and desperately need major foreign aid. Zimbabwe was once a destination of choice for foreign capital but has been rendered inhospitable by harsh laws and policy inconsistencies. Presently, its financial system is weak and unable to bankroll long-term projects. But the inclusive government has begun the process of winning back the lost public confidence, critical for reviving deposits and foreign investor interest.
Post published in: Economy