Lending rates in Zimbabwe are still too high and are prohibitive to the productive sectors, central bank governor Gideon Gono says. This problem is compounded by the aloof attitude of some multinational banks that are not actively supporting the domestic economy and seem to be extending “illegal international sanctions on Zimbabwe”, he said.
Gono who for five years ran the country’s economy before his wings were clipped by Finance Minister Tendai Biti said Zimbabwe’s lending rates which ranged from 12 to 18 percent a year were much higher than the prime lending rate of 9 percent in neighbouring South Africa.
He said it was encouraging that banking deposits were improving and had increased from $1.4 billion in January 2010 to $2.1 billion in November with households accounting for 17 percent of the deposits.
Credit to the private sector had also grown from $760 million in January to $1.5 billion in November. The beneficiaries were evenly distributed with 22.3 percent going to agriculture, 20.3 percent to manufacturing and 20 percent to distribution but the loans to deposit ration had declined from 76.2 percent in October to 68.8 percent in November. The international benchmark is 70-90 percent.
Gono, however, said some of the multinational banks seemed to be deliberately declining loans to Zimbabwean companies and individuals on the European Union and United States sanction list.
These banks were also paralysing the money and capital markets by sterilising huge domestic deposits which they were not lending to the productive sector.
Figures he released showed that Barclays Bank for example had received deposits of $172 million by December last year but had only lent out $43.6million. Standard Chartered Bank had lent out $110.5 million and received deposits of $218 million.
Locally owned banks like Agribank had given out more loans than the money they had received with loans totalling $30.3 million against deposits of $24.7 million. Privately owned MBCA gave out $86.6 million but deposits were only $68.4. Beating them all was CBZ building society which had deposits of $10.4 million but gave out $18.9 million in loans.