The shortage of foreign currency and the accumulation of arrears is discouraging foreign investment as investors are unable to repatriate their dividends. By the end of last year an estimated US$500 million in dividends was locked in the country due to the lack of foreign currency, Trust Holdings says in its report for the year ending December.
It says external payment arrears had risen to about US$1.5 billion by the end of last year. It says 2002 was a difficult year with inflation at the end of the year rising to 198.9 percent compared to the regional average of 15 percent.
Gross Domestic Product is estimated to have declined by a further 12.5 percent while agriculture, which is key to the economy had declined by 25 percent.
Manufacturing had declined by 17.5 percent while mining is estimated to have declined by 7.1 percent. Production of asbestos had, however, increased by 23 percent while that of platinum had increased from 1 519kgs in 2001 to 2 306 kgs.
Money supply growth had shot up from 99.5 percent to 148.9 percent by November. The banking sector’s credit to government had risen from $93.5 billion in December 2001 to $145.7 billion in October while that to the private sector had increased by $165.5 billion to $310.9 billion.
It says the price of properties had increased more than three-fold as people sought a hedge against inflation.
What was also of concern was that government expenditure continued to be biased towards consumptive spending with 93 percent of the government expenditure going to recurrent activities and only 7 percent to capital projects.
The financial services group which comprises Trust Banking Corporation, Trustfin, Trust Corporate Securities, and Trustfin Insurance Brokers, had a net profit of $6 billion last year, up from $1.6 billion.
Net interest income rose from $1.2 billion to $5.6 billion while fees and commissions increased from $1.7 billion to $4.7 billion.
There were also improvements in dividend income which increased from $329 million to $1.6 billion, net trading income which rose from $1 billion to $1.5 billion and profit on investment which shot up from $48.1 million to $977 million.
The bank’s assets increased from $25 billion to $98.5 billion.