National News

Industry flags weak banking system

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Industry has said the weaknesses in Zimbabwe’s banking system have hamstrung the flow of long term funding to industrialists thereby curtailing the growth of the sector.

Zimbabwe’s largest business representative group, the Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza, yesterday said the absence of merchant banks and discount houses that would ordinarily avail capital loans for industry to procure long-term assets, was adversely affecting local manufacturing companies.

Zimbabwe’s banking sector consists of 13 commercial banks, five building societies, and one savings bank, which are only availing working capital loans, which companies can use to cover short-term operational needs. “It makes it difficult for more lending to the industrial sector,” Matsheza said at the CZI’s annual congress in Harare.

CZI chief economist, Cornelius Dube weighed in saying the lack of funding has put the National Development Strategy (NDS1) off balance as Zimbabwe could not get enough money to fund projects.

“NDS 1 required around US$40bn but due to lack of capital, very little progress has been made and in terms of the value chain funding we needed around US$3bn and we could not get even 25% of that amount hence we are off track. The other big issue is that our banks are doing commercial banking and no merchant banking. Therefore, loans for capital are not readily available,” Dube said.

The calls by CZI come amid a push for local businesses to be competitive for the country to attain an upper middle income economy by 2030.

Meanwhile, Matsheza told the delegates that Zimbabwe is in a global village where it competes fairly with its counterparts.

“…We cannot have our own definition of an upper middle-income economy and if we are aiming for it our policy and business ambitions have to match that goal,” Matsheza said. “We are not placed in a special league; we are viewed in relation to the rest of the world. There are no exceptions or exemptions.”

He said quality standards are the same everywhere and if Zimbabwe does not meet the requirements of such, it cannot trade goods or services with the rest of the world.

“Our contribution to and subjection to national, regional and global policies is going to be determined by how much we embrace the realities,” Matsheza said.

The CZI boss said the government should deal with long-standing challenges in the economy, mainly the currency issue, ease of doing business and competitiveness, among many other problems.

“Deal with the issue of foreign currency surrender requirements, as this is adversely affecting export viability in the face of an overvalued exchange rate.  (There is also a need) to accelerate operationalisation of the Tripartite Negotiation Forum to enable a social dialogue and a social contract,” Matsheza said.

Industry and Commerce minister Sekai Nzenza said the government was dealing with challenges affecting the economy.

 “We are engaging the Treasury and the central bank to see how best we can address various challenges affecting the economy so that we remain on track to achieve the 2030 vision,” Nzenza said

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