Finance minister Patrick Chinamasa has attacked the banking sector, blaming some financial institutions of attempting to drive the economy on its knees since the adoption of multiple currencies five years back.
Addressing delegates attending an economic outlook symposium organised by Mandel Training Centre and the University of Pretoria-based Gordon Institute of Business Science, Chinamasa said financial institutions should extend more credit towards the thriving informal sector as Zimbabwe’s economy transforms.
Chinamasa accused some banks of imposing sanctions on the economy by limiting lines of credit.
“We cannot have a situation where the majority of our population has little access to the economy and no access to capital,” Chinamasa said.
“They used to organise lines of credit of up to $800 million, but now it is down to $40 million a year which is suggesting they are strategising an exit out of our economy . . . I get this feeling that these banks are imposing sanctions onto their own country.
“Our economy is now an informal economy, you can’t deny that there are more economically active people in the informal sector than the formal sector. There are less workers now through closures of those factories and mines. They (people) are keeping those funds under the pillows.”
According to a Finscope study, 40% of the Zimbabwean population was unbanked.
Statistics show that Zimbabwe’s financial industry has more than $4 billion which remains unbanked as financial institutions fail to restore depositor confidence.
Turning to the mining sector, Chinamasa said the capital-intensive industry, now the key driver of the economy, should overhaul their business models to ensure that they significantly contribute to the economy. Mining now accounts for over 60% of total exports.
“We need recapitalisation of our mines and we need better management of our mines. We have been overtaken by Tanzania in terms of gold production,” the Finance minister said.
“I know people say don’t find excuses, but Zimbabwe is on sanctions, but the issue is we should overcome them, go around them. If there is patriotism we can overcome, other nations have overcome sanctions.”
Total banking sector deposits, according to the Reserve Bank of Zimbabwe, was up 4,52% to 4,62 billion as at October 25 2013. The loans to deposit ratio decreased to 81,67 from 83,23% during the period under review.