adminon-lending to companies at 15 percent with effect from next month.
The 15 percent is inclusive of interest payable and any handling charges.
It consists of an interest rate of 10 percent plus a profit margin of up to 3 percent and levy handling and other charges amounting to no more than 2 percent.
NSSA general manager Mr James Matiza told bankers at a meeting at NSSA headquarters on Wednesday that the new interest rate would apply to all loans, regardless of the loan tenure.
He said NSSA might review the position after a year.
“No matter what period the loan was lent for from 30 days up to 365 days, the interest rate should be not more than this amount.
“That might not make economic sense normally but Zimbabwe’s economy at present is not normal,” he said.
He said the NSSA board was concerned that banks were on-lending the money at exorbitant interest rates and adding on steep handling charges as well.
“The worrying thing is that we are trying to help companies survive,” he said.
“But if you lend the money to companies at 40 percent or 60 percent interest rate, we are not helping them at all.”
Mr Matiza said companies were folding because they could not repay bank loans.
He said NSSA would want to know who
the money was lent to and would make follow-ups to ensure banks stuck to this condition.
Mr Matiza said NSSA had an interest in helping businesses survive, since it depended on employees for contributions and wanted to ensure those in employment remained employed, “so that they are able to contribute towards the pension they would require when they retire”.
“We are not trying to squeeze the banks out of profit but we are not doing the companies any good if they are charged interest rates of 40 percent,” he said.
He cited the case of a company in which NSSA was a shareholder for which US$4 million was made available through one of the banks.
The bank deducted US$800 000 of this amount in handling fees and added a substantial rate of interest to what it was paying NSSA.
In the end the company only accessed about US$2,7 million of the US$4 million made available.
Mr Matiza said, like other social security funds elsewhere, NSSA was trying to contribute to employment creation and retention by providing banks with money for onward lending to businesses.
He said NSSA was not able to contribute as much in this regard as better-endowed social security schemes elsewhere, due to its limited combined contribution from a person in employment and his employer of only US$12 per month.
Nevertheless at the end of June NSSA funds totalling US$180 million were circulating among banks for onward lending to businesses.
Mr Matiza explained to the bankers that the amount of funds allocated to each bank depended on a formula applied to information the banks provided, which included the bank’s balance sheet.
Established banks would have higher allocations than newer ones. This was because of NSSA’s duty to safeguard contributors’ funds.
For the same reason NSSA had to ensure there was satisfactory security for the funds lent out.
NSSA was unable to accept shares as security because of the volatility of the stock market.
But he said they would in future accept property as security for longer-term loans.
To facilitate this, he said a mortgage bond would have to be registered in NSSA’s favour.
He said bank clients who were lent NSSA funds would be made aware of the source of the funds, so that they realise that if the bank collapsed, their loans would still have to be paid to NSSA.
Online Reporter