The Reserve Bank of Zimbabwe (RBZ) has approved over $1,6 billion in lines of credit to local financial institutions to fund the agriculture and manufacturing sectors, it has been learnt.
Speaking at the Independent Dialogue sponsored by the Zimbabwe Independent RBZ governor Gideon Gono said despite the steady progress made by financial institutions, there was need to diligently deploy effective risk management systems.
“Notwithstanding the hazardous effects of the illegal sanctions currently weighing down on the economy, international capital remains keenly interested in Zimbabwe,” Gono said.
“For the first half of this year, total External Loans Coordinating Committee-approved external facilities amounted to $1,695 billion, while total utilisation of these facilities stand under 50% at only $617 million.”
Gono said banks were doing their best to lend given the constrained environment they were operating in.
“Notwithstanding the ongoing macroeconomic challenges the central bank has noted significant improvement in the level of support by banking institutions to key productive sectors since the introduction of the multi-currency system,” he said.
According to statistics from the RBZ, total banking sector assets have grown from $2,2 billion in December 2009 to $3,9 billion in March 2011.
Between December 2009 and June 2011, the total banking sector loans and advances increased from $686 million to $2,37 billion.
Total banking sector deposits increased by 63% from $2,57 billion as at December 2010 to $3,19 billion by June 2011.
Gono said the level of credit support to the private sector in relation to deposits was largely comparable to regional and international averages which range between 70% and 90%.
The loan-to-deposit ratio improved from 33% in April 2009 to 74% in June 2011.
“In spite of the liquidity constraints, the market has seen an improvement in the tenure of loans offered, particularly mortgage financing, with some building societies now offering facilities of up to ten years,” said Gono.
The central bank governor however said the assessment by the International Monetary Fund on the banking institutions was out of context.