admindisbursement to industry.
This follows revelations that a huge chunk of external lines of credit secured by local banks had not been extended to productive sectors of the economy.
It also comes when local firms are buckling under financial distress and prohibitively high interest charges on mostly short-term loans.
Reserve Bank Governor Dr Gideon Gono last week said the central bank had approved lines of credit worth US$1,6 billion since January this year but only US$600 million had been extended to productive sectors of the economy as of July 15.
Dr Gono attributed the low disbursement to failure by firms to meet draw-down conditions.
He also said funding was available for all bankable projects. Some foreign banks also reportedly require approval from their parent companies before extending loans to local firms, leading to low rates of disbursement.
An unnamed foreign bank is reportedly sitting on US$300 million in deposits compared with another indigenous bank that has loaned out US$700 million.
BAZ vice-president Mr George Guvamatanga cited constraints around collateral and the lengthy period of registering it, as probable impediments to the low rate of loan disbursement.
“Whether it is a loan for a dollar or more, standard requirements apply,” said Mr Guvamatanga. And “banks don’t release money until those conditions are met”.
A total of US$400 million had been earmarked for agriculture, US$283 million for financial services and US$290 million for the manufacturing sector.
The mining sector had US$251 million set aside for it while distribution and tourism had US$44 million and US$10 million set aside for them respectively, from the US$1,6 billion.
Mr Guvamatanga said many companies wishing to borrow faced difficulties in obtaining collateral to access the much-needed funds. According to Industry and Commerce Minister Welshman Ncube, industry requires
about US$2 billion to retool after a decade of distress.
Mostly foreign banks have been accused of sitting on millions of dollars at a time many local firms were battling to access affordable finance.
But the same banks were giving negligible interest rates on deposits while they charged the depositors more for keeping their money. Short-term loans of say 90 days attract as high as 25 percent to 30 percent.
Nonetheless, Dr Gono said all bankable projects would always receive funding.
Zimbabwe is reeling from lack of easily accessible long- term funding after a decade of economic instability constrained industry’s capacity to recapitalise.
Zimbabwe requires an estimated US$8 billion to fund economic recovery after a decade of instability eroded all savings.
Online Reporter