BAZ demands banking culture shift to unlock capital

CLOUDINE MATOLA

The banking sector has called for a fundamental shift in the financial behaviour of tourism and hospitality operators, warning that the industry’s reliance on cash transactions and weak banking discipline is preventing businesses from accessing the long-term capital needed to modernise their operations, Business Times can report.

Speaking at the tourism and hospitality investment conference in Harare this week, Bankers Association of Zimbabwe (BAZ) president Solomon Nyanhongo said operators must embrace formal banking, strengthen corporate governance and consistently service debt if they are to unlock funding from local banks and international financiers.

His remarks come as the hospitality industry seeks significant investment to refurbish ageing hotels and expand capacity ahead of Zimbabwe’s hosting of the Intra-African Trade Fair (IATF) in 2029.

Nyanhongo said the industry’s heavy reliance on cash transactions deprives banks of the financial records required to assess borrowers’ creditworthiness, making it difficult to extend financing.

“Operators must strengthen financial management, governance and reporting standards, and develop a culture of banking their proceeds and repaying their debts,” he said.

“We have a historical problem where people want funds to merely pass through the banking system. We need to change those attitudes. Keeping money in cash boxes does not create traceability.

“Most people expect banks to finance their businesses, yet they do not want their money to remain in the banking system. That creates a mismatch.

“Once you create traceability, it becomes much easier for banks to assess your credit capacity and provide funding. We are encouraging operators to ensure transactions pass through the banking system and that borrowed funds are repaid. That gives banks and financing partners greater confidence.”

Nyanhongo said the hospitality sector also faces a structural financing mismatch, with hotels requiring long-term capital while Zimbabwe’s banking sector is funded predominantly by short-term deposits.

“Hospitality assets require long-term funding solutions. However, if you analyse the balance sheets of Zimbabwean banks, more than 90% of deposits are demand deposits held in current and call accounts, where customers expect immediate access to their money. That presents a structural challenge for long-term lending,” he said.

To widen access to funding, Nyanhongo urged hospitality operators to align their investment strategies with the growing global appetite for sustainable finance by investing in renewable energy, water conservation, waste management, climate resilience and environmentally responsible infrastructure.

Such projects, he said, lower operating costs, improve business resilience and enhance eligibility for international green financing.

“Investments in renewable energy, water efficiency, waste management, climate resilience and environmentally responsible infrastructure are becoming increasingly important, particularly for businesses seeking access to international capital,” he said.

“Sustainable energy projects can significantly reduce electricity costs while improving operational resilience. More importantly, they position operators to access emerging pools of sustainable and green finance from international partners.”

Nyanhongo said BAZ was engaging regional and international financiers, including development finance institutions (DFIs), to mobilise long-term capital through credit guarantees, political risk insurance and project preparation support.

However, he stressed that access to development finance would ultimately depend on the industry’s ability to present credible, investment-ready projects.

“We are engaging international partners, regional financiers, providers of credit guarantees and political risk cover to help bridge the financing gap,” he said.

“But operators must equally present well-structured, investment-ready projects. Development finance institutions will only support projects that are bankable, where risks have been mitigated, safeguards are in place and there is confidence that the funds will be repaid.

“We therefore need to strengthen the industry’s capacity to prepare investment-grade proposals that meet international financing standards.”