Banks splurge ZWL$1.29 trillion
BUSINESS REPORTER
Bank loans more than doubled to ZWL$1.29 trillion distributed across all sectors in the last six months of last year from ZWL$603.14bn in the first half of 2022, official data from the central banks shows.
Of the total amount, the productive sector got a hefty 78.45% while agriculture was second at 22.94%.
The lenders availed 18% for consumptive purposes.
The balance was availed to other sectors including manufacturing, commercial, mining, distribution and construction, among many other sectors, central bank chief John Mangudya said.
He said banking institutions continue to play an important role in supporting the productive sectors which contribute towards economic recovery and growth.
“The loans to the productive sectors constituted 78.45% of total loans as at 31 December 2022 up from 71.12% reported as at 30 June 2022. The increase was largely attributed to an increase in foreign currency denominated loans, leading to the increase in their proportion from 65.87% as at 30 June 2022 to 78.20% of total banking sector loans,” Mangudya said.
He said the level of financial intermediation as measured by total loans to total deposit ratio, improved to 55.67% as at December 31 2022 from 52.83% recorded as at June 30 2022.
The foreign currency loans to foreign currency deposits ratio as at 31 December 2022 was 62.69% while the ZW$ loans to deposit ratio was 41.40% as at the same reporting date, Mangudya said.
Meanwhile, the Bankers Association of Zimbabwe chief executive officer Fanwell Mutogo told Business Times that the lenders have availed about US$400m to support tobacco farming in the 2022/2023 summer cropping season.
“Local banks were said to have no capacity to fund the tobacco but to date, we have funded upwards of US$400m into the current crop,” Mutogo said.
He however said the market lacks long-term funds required by the tobacco industry.
Contractors and tobacco merchants have been the major funders of tobacco farming in Zimbabwe but with banks taking this initiative, merchants’ influence may be reduced.
This has been a major concern.
“What we want to make sure is that tobacco financing comes from commercial banks instead of having it from contractors,” the Tobacco Industry and Marketing Board chairman, Patrick Devenish said.
He added: “We feel that the TIMB database is very strong and stop order is good enough to recoup funders’ money.”
