Interest rates still high

LIVINGSTONE MARUFU

The Monetary Policy Committee this week  lowered the annual interest rates to 130% from 150% but  business leaders  still criticised  the rate as  being unreasonably high.

They said this is highly expensive for the companies since it forces them to raise the price of their goods in order to stay in business.

“At 130%, the interest rates are still very high as in terms of the in duplum rule the borrower will  accrue arrear interest rate above  the outstanding principal debt, which is not viable for the Zimbabwean enterprises which are facing various  headwinds,” CEO Africa Roundtable board chairman Oswell Binha told Business Times.

He added: “Certainly, borrowing   at above  100% is uneconomic. In any economy, borrowing at a rate of  above 100%  is catastrophic and extending loans at 130% is a heist on the borrower,” Binha said.

“We have always said that the government should come out clean on the de-dollarisation roadmap. Now that the  government said we may not use the US$ by 2025 , it’s a heist that the authorities have done in the economy. I don’t think the ZWL$ will be able to hold value in the foreseeable future,” Binha said.

According to Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), the 130% interest rate will fully drive the dollarization of the economy.

“It is a commendable move if you look at our submissions to the central bank,  we have always been clamouring for a downward review of the interest rates.

“However, the interest rates are still way above the inflation figures which makes the local unit unattractive. If I want to borrow Zimbabwe dollars, everyone knows that I will have to fork out 130% which makes  borrowing in  the local currency very expensive,” Mugaga said.

Fanwell Mutogo, the CEO of the Bankers Association of Zimbabwe (BAZ), however, praised the move.

“The new gazetted interest rate of 130% is a positive development as it allows some companies to borrow as it is in line with the inflationary pressures.

“Despite comments from some quarters that the interest rates remain high, we should celebrate that at least there is a movement towards the right direction,” Mutogo said.