PRESIDENT Robert Mugabe has criticised the banking sector for charging high transaction fees — but failing to award interest on deposits — and starving local small to medium enterprises of funding.
Report by Tarisai Tahungai
Speaking at the official launch of the Finscope Zimbabwe 2012 Small and Medium Enterprises Survey report in Harare, Mugabe said people had lost confidence in the banking sector, hence there was an urgent need to change that perspective. The report shows that 5,7 million people were employed by the sector amid concern of low financial inclusion.
“I urge our financial sector, including our financial institutions, to improve their honest handling of their services and especially the deposits brought to banks by clients,” Mugabe said.
He said improving clients’ confidence in the sector was beneficial to banks as the banking public would not hesitate to deposit their hard-earned money.
“This is the confidence that the banking sector should bestow in the clients so that small and medium enterprises (SMEs) will start banking with them,” he said.
The Reserve Bank of Zimbabwe has already signed a memorandum of understanding with local banks to lower bank charges as well as pay reasonable interest on deposits to promote a saving culture.
Mugabe said the banking sector should design products and schemes that attract the SMEs to bank with them.
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“It is necessary to mop up liquidity from small businesses which, in turn, is used to increase cashflow. Part of creating the necessary environment to attract these SMEs to bank is to lower bank charges,” he said.
Mugabe went on to say that although there was need for more deposits in the financial sector, people needed to feel confident that their money would be safe and would attract interest.
He also urged SMEs to formalise all operations so that the country could compete with developed economies.
He added that the report highlighted that only 15% of SME owners have businesses registered and 71% of these are registered with local authorities and other statutory bodies, indicating that 85% of SME businesses were not registered.
Speaking during a panel discussion at the same event, AfrAsia Kingdom Holdings founder Nigel Chanakira said a high appetite by local entreprenuers to borrow seed capital from banks was in some cases resulting in a high level of non-performing loans.
