Banks project subdued lending
RYAN CHIGOCHE
The obtaining liquidity squeeze will lead to subdued lending, a banker has warned, putting a fresh damper on economic growth projections.
CABS managing director, Mehluli Mpofu said the shortage of the Zimbabwe dollar in the market on the back of measures introduced by government to tame inflation was limiting banks capacity to lend in the local currency.
“The impact from a lending perspective is that it’s listening to what has been happening on the fiscal side,” Mpofu said, adding, “This subdued lending would hit the industry.”
The Reserve Bank of Zimbabwe maintained a tight monetary policy resulting in tight liquidity in the market as it moved to shore up the local currency.
The Ministry of Finance and Economic Development also suspended payments to government contractors as part of efforts to halt a slump in the local currency which is fuelling hyperinflation.
However, as the country is approaching the summer cropping season Mpofu, is expecting liquidity to be induced into the market as the country is highly dependent on agriculture.
“We are getting close to the summer cropping season. There will eventually be a need to actually provide some liquidity to go towards summer cropping.
“There might be some policy change which recognises that we are a country that depends on agriculture so there will certainly be an impact on the lending side,’’ Mpofu said.
He said the bank will continue to lend in local currency if liquidity is allowed, given the crunch.
Bankers Association of Zimbabwe CEO Fanwell Mutogo said the decision by the authorities has tightened liquidity in the market such that there is very limited lending activity in the economy.
“Liquidity is very tight and we know why it is like that and what they want to achieve but this has affected agriculture lending.
“Once the liquidity situation improves we will participate strongly as far as lending is concerned. As of now we are participating but not to our potential because of the liquidity constraints,” Mutogo said.
