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Lovemore Zigara Business Correspondent
THE Confederation of Zimbabwe Industries (CZI) says the prevailing interest rates on the market are stifling prospects of stimulating the growth of the productive sectors.
The industrial lobby group noted that the prevailing interest rates regime favours importers who are capable of charging markups of up to 100 percent.
CZI president Busisa Moyo said there was a need for the government to engage financial institutions to review interest rates as the “environment doesn’t support the manufacturer.”
He said interest rates were incentivising cross border traders and imports.
“The cost of money in the economy incentivises people to import because interest rates are so high and they don’t work for manufacturers but for the importer. If I get money at 18 percent I can go to South Africa two times a month so I can afford the interest rates because I’m charging a 60 percent margin or even 100 percent.
“Those are the only people that can borrow money from the bank. From a profitability point of view the environment doesn’t support the manufacturers.”
President Robert Mugabe said this week that banks were undermining economic growth by charging exorbitant interest rates and other charges which eroded depositors’ savings.
In August, central bank governor John Mangudya during his mid-term monetary policy statement capped interest rates.
However, the interest rates are still high for a liberalised economy and this has been blamed for stifling economic growth and breeding non-performing loans in the economy.
Online Reporter