Zim firms in fresh IFIs headache

LIVINGSTONE MARUFU

International Financial Institutions (IFIs) are not prepared to extend fresh cash to Zimbabwe industries amid fears of high country risk, the Bankers of Zimbabwe (BAZ) has said.

Zimbabwe’s external debt amounts to US$14.04bn. Out of this, IFIs are owed about US$2.52bn with World Bank, African Development Bank and European Investment Bank owed US$1.46bn, US$71m and US$372m respectively, according to the 2023 national budget.

The balance is owed to Paris Club, non-Paris club members, blocked funds, multilateral and bilateral creditors.

BAZ chief executive officer Fanwell Mutogo told Business Times: “This market lacks long-term funds required by the industry for retooling.

“The country has 13 commercial banks and no merchant banks but the issue is not in the number of commercial banks and or merchant banks as implied in some quotas but it is about international financiers not prepared to extend long-term funding into the economy.

Recently, the Confederation of Zimbabwe Industries president Kurai Matsheza said the absence of international financiers has adversely affected local manufacturing companies.

“Commercial banks are only availing working capital loans, which companies can use to cover short-term operational needs and it makes it difficult for more lending to the industrial sector,” Matsheza said.

Mutogo said in terms of providing loans to the productive sectors, financial support from local banks has improved.

“Financial intermediation as measured by loans to deposit ratio, improved to 53.69% as of June 30 2022 from 48.27% recorded as of December 31, 2021.

“Loans to the productive sectors of the economy constituted 76.29% of total loans as of June 30, 2022,” Mutogo said.

He said the difficult operating environment was restricting the banks from fully supporting the industry but can extend loans whenever they can.

Zimbabwe is in need of cheap patient capital to reboot the economy.