Loans to productive sectors jump 76pc
BANKING institutions continue to play a key role in driving the re-industrialisation and growth of the economy after increasing loans to productive sectors by 76 percent in 2021.
The latest banking sector report shows that banking institutions advanced a total of $230 billion last year, a growth of 76 percent compared to the 2020 figure of $144 billion.
Agriculture was the biggest beneficiary, accounting for over 28 percent of total loans, followed by distribution, manufacturing, commerce, mining, housing mortgages, transport, and construction.
Speaking at a recent Reserve Bank of Zimbabwe event, AFC Commercial Bank head of strategy, Mr Joseph Mverecha said the prevailing stability would be key in growing banking sector confidence.
“The trend has to continue but it is entirely on how the current policies can instil discipline and promote further growth,” said Mr Mverecha.
Banc ABC group economist, Mr James Wadi also weighed in on the same issue saying key economic indicators will be fundamental in determining the sustainability of the economy.
“The exchange rate issue and tight inflation management policies will also be critical in ensuring that the growth trajectory is sustained in all key sectors of this economy,” he said.
Banks recently revealed that the demand for loans was expected to continue growing in line with the sustained recovery of economic activity following the negative impact of the Covid-19 pandemic.
Official data from the central bank also shows that total banking sector loans and advances increased by over 61 percent in the 12 months to December 2021 to $230 billion.
The trend was attributed by monetary authorities to the translation of foreign currencydenominated loans vis a vis the level of inflation in the economy, which closed the year at 60 percent.
The data indicates that as of December 31, 2021, foreign currency denominated loans constituted about 37 percent of total banking sector loans, reflecting an increase of 30,16 percent.
Confederation of Zimbabwe Industries (CZI), Kurai Matsheza said access to forfex loans by companies for recapitalisation had improved, with banks readily availing the funds.
“We are seeing an increase in the number of our members that are getting US dollar based loans in order to restock and recapitalize. This is a good development as it reduces the risk of losing value through conversions,” he said.
However, market watchers warned that the high cost of borrowings needed to be addressed to enable the low income earning sectors of the economy to also have access to the loans.-The Herald
