With less than two weeks until Finance Minister Tendai Biti announces the 2013 national budget the BAZ president blamed the banking sector for a persistent low deposit ratio that he said was reflective of declining confidence in the sector.
Guvamatanga said the absence of the lender of last resort facility performed by the Reserve Bank of Zimbabwe had seen most financial institutions accessing money from multilateral institutions at between 30-40 percent interest rates.
“I have to admit that we have issues with some of our members, whom I refer to as outliers, who charge interest rates of between 30-40 percent. I would say 15 percent is a reasonable rate given the current financial situation in the country,” he said, adding that lack of diversification into other financial services products had limited the growth of the sector.
“It is unfortunate that everyone is converting their licences into commercial bank licences when there are opportunities for other forms of banking. We need sector-specific banks. We have Agribank and the Infrastructural Development Bank, but we still need more,” said Guvamatanga.
In an apparent reaction to the concerns of players in the informal sector regarding the lack of financial support by the banking sector, Guvamatanga said the prevailing financial system regulations make it difficult for banks to give loans to companies.
“It is actually easier to borrow as an individual from a bank than as a company – as that will entail you submitting audited financials – which the majority of you do not have,” he said. Finance Minister Biti has vowed to clamp down on the banking sector, accusing it of fleecing depositors’ money through unjust interest rates. His 2013 Budget speech is expected to contain some measures to rein in what he has termed “vodoo banking practices”. Zimbabwe’s 26 banking institutions include 17 commercial banks, four merchant banks, four building societies and one savings bank. Of these, only foreign-owned banks like Barclays and Standard Chartered Bank, Standard Bank’s subsidiary, Stanbic, Nedbank ’s MBCA, Togo-based Ecobank, and CABS, a subsidiary of Old Mutual , are strong, with a combined deposit base of more than $1bn.
The high lending rates and low returns on deposits have not gone down well with depositors, resulting in most people resorting to keeping their money at home.
Post published in: News