Gono urges Govt to negotiate better offshore financing deals

banks’ intermediation policies in respect of these external lines of credit to take into account “regional” and/or “provincial” sensibilities.
This is in view of the limited uptake of external lines of credit that were approved last year.
Official figures from the RBZ show that a mere 36 percent of external lines of credit negotiated to September last year was taken up.
Dr Gono said that as a result of the low uptake the offshore financing option was having a limited impact on the liquidity crunch.
“Out of the US$2,6 billion short-term external lines of credit approved by the central bank during the first three-quarters of 2011, only US$922,7 million, which translates to 36,1 percent, was utilised.
“The low utilised level has been attributed to stringent conditions that needed to be satisfied before accessing foreign lines of credit,” said Dr Gono.
The RBZ Governor was speaking in Bulawayo recently at a Confederation of Zimbabwe Industries Matabeleland Chamber meeting.
Dr Gono added that there may be need for the respective financial institutions to take “a regional or provincial approach in their intermediation policies” as opposed to all-encompassing conditions.
The issue of stringent conditions for withdrawal has apparently also affected internal credit lines, namely the US$40 million Distressed Industries and Marginalised Areas Fund (Dimaf) and the US$100 million Zimbabwe Economic and Trade Revival Facility (Zetref).
For instance, indications are that of the total Dimaf funds only US$900 000 had been disbursed by the close of last year.
The current pool of total banking sector deposits, which is approximately US$3,3 billion is a far cry to the funding needs required by the productive sectors of the local economy.
Resultantly, the competition for accessing loans from the local banks is very high resulting in strict lending by banks, especially to their established clients.
Bankers’ Association of Zimbabwe president Mr John Mushayavanhu has reiterated that the country has too many banks chasing too little money.
“The US$3,3 billion total deposits for our banking sector constitutes the capital base of one of the smaller banks in South Africa.
“There is definitely need for our banks to consolidate,” he said.
It is perhaps to this extent that the Government has made suggestions towards a merger of the three banks that are yet to comply with the RBZ minimum capital requirements.
Meanwhile, Dr Gono has said the shortage of small denominations in the country has resulted in significant price distortions.
He said the inadequacy of smaller denominations is apparently causing distorted exchange rates, and therefore impacting negatively on people’s salaries.
“The challenges have manifested themselves through distorted cross exchange rates in the country’s major towns and cities, particularly in Harare and Bulawayo.
“This has resulted in price distortions and erosion of salaries especially for people in Bulawayo and its surroundings,” he said.
He added that it was therefore necessary for traders to clearly display the official daily cross exchange rates so as to assist the transacting public.