Afreximbank raises Zim borrowing limit

was therefore critical for local financial institutions to have a strong capital base to be able to access long-term lines of credit from the regional bank.
“The Afreximbank has approved a (new) country (borrowing) limit of close to US$600 million for Zimbabwe,” he said. “Now, is there an institution that can absorb that amount with a capital base of US$10 million?”
Dr Gono was addressing bankers last Friday on the increase in minimum capital requirements, which were raised last week by up to 900 percent.
Minimum capital thresholds for commercial and merchant banks were raised to US$100 million            from US$12, 5 million and US$10 million, respectively.
The central bank also increased the minimum capital base for building societies from US$10 million to US$80 million, finance and discount                     houses from US$7,5 million to US$60 million and US$1 million to US$5 million for micro-finance house.
Dr Gono said the banks would be required to be fully compliant by June 20 2014, but should meet 25 percent of the new capital levels by the end of this year.
Financial institutions will be further required to be 50 percent and 75 percent compliant by June 30 and December 31 next year, respectively.
The Bankers Association of Zimbabwe said it was in agreement with the governor’s position on higher minimum thresholds as that was vital for a strong financial system and risk cover for depositors’ funds in the event of bank failure. 
Dr Gono said higher capital levels for banks were critical to attract meaningful lines of credit and enhance profitability. He added that a strong capital base had a positive correlation with interest rates, liquidity, competitiveness, infrastructure and confidence, credit extension.
Afreximbank remains one of Zimbabwe’s biggest sources of external lines of credit, having so far advanced about US$3 billion to the country.