adminZimbabwean banks need to come up with a home-grown lending template to help improve access to credit by struggling firms in the country, a study has shown.
Although the liquidity position of the country has improved since dollarisation, firms continue to obtain lines of credit from banks at very high costs and on very short terms that are not in line with manufacturing cycles.
According to a study commissioned by the Zimbabwe Economic Policy and Research Unit (Zeparu), the lending conditions by banks are mostly the standard bank lending conditions but they become too stringent for most of local firms still reeling from the effects of hyperinflation.
“Based on the standard template, most of the firms are not creditworthy. Some home-grown template is called for, which is able to reveal some potential that exists for some firms if properly funded. This could also include strategies and means to ensure that order financing is allowed for with limited default risk.
“There is still more to be done by firms to become creditworthy as their conditions are also not enhancing their chances of getting credit. Since some blue chip companies are able to get credit at reasonably favourable terms, improving creditworthiness is the key towards access to suitable lines of bank credit,” Zeparu said.
To this end, the study recommended that government facilitates the quick establishment of the proposed credit reference bureau. The Reserve Bank of Zimbabwe is in the process of creating a credit reference bureau aimed at helping banks and micro-finance institutions to avoid lending money to individuals and companies over-exposed to debt. — BH24
Online Reporter