By Alois Vinga
Despite recurrent currency instability in the country, Zimbabwe’s financial institutions have seen their credit facilities extended to the private sector register an annual growth of 9.12 percent in what players hope could help resuscitate local industry.
This is according to the latest Reserve Bank of Zimbabwe economic monthly update.
The document entitled, “Monthly Economic Review December 2018” reports that credit to the private sector recorded an annual growth of 9.12 percent in December 2018.
Month-on month credit to the private sector grew by 1.72 percent, from around $3 million in November 2018 to $4 million during the month under review.
Private sector credit was distributed as follows: households, 26.33 percent; agriculture, 19.36 percent; services, 14 percent; distribution 12 percent; manufacturing, 10 percent; financial organisations and investments, 7 percent mining; construction, 4 percent; transport, 3 percent; and communications, 2 percent.
Commenting on the development, Confederation of Zimbabwe Industries president, Sifelani Jabangwe said that the figures indicate moves towards industrial growth.
“We are grateful of the increases because lately the banking sector was not willing to extend credit lines to the private sector as government was crowding us out.
“The developments have also been necessitated by the Zimbabwe Asset Management Company’s efforts which saw Non Performing Loans being bought and this positioned banks to advance loans,” he said.
Javangwe however urged financial institutions to issue loans with flexible interest rates to allow room for business growth.
In 2017, net credit to government rose by 70 percent due to increased reliance by government on the banking sector to finance its budget deficit.
But Finance Minister Mthuli Ncube last year vowed that he will force government to spend within its limits and he has since stopped the issuance of Treasury Bills which were used to guarantee credit lines.
The December 2018 monthly review also says that the Zimbabwe Stock all Share Index declined by 9 percent while foreign investor participation, as measured by foreigners’ contribution to the value of shares traded, decreased to 30 percent.