Wake up, smell the coffee Chinamasa

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Finance minister Patrick Chinamasa, speaking at the just-ended economic outlook symposium in Harare, accused local banks of imposing sanctions on the fragile economy by reducing lines of credit to $40 million from $800 million within the space of a decade. He echoed the Zanu PF mantra of blaming banks and sanctions for the country’s economic woes.

NewsDay Editorial

It is ironic that while Chinamasa was busy accusing some financial institutions of sabotage he was not addressing the fundamentals that must be put in place before these financial institutions could release depositors’ money.

It is a fact that whatever money is held by banks belongs to depositors, therefore financial institutions must be prudent in lending it out to their customers. The issue of collateral security is therefore fundamental. But where property rights are not guaranteed it becomes risky to lend money willy-nilly.

Concerning new farmers, banks are wary of the culture where farming is taken as a pastime rather than real business, with farmers spending most of their time in cities far away from the farms.

For the record, Zimbabwe’s economy has had changes between 2003 and 2013, during which period the economy sunk to unprecedented levels. This was triggered by excessive printing of the now demonitised Zimbabwe dollar which led to hyperinflation and the subsequent use of hard currencies to stabilise the economy.

Due to the underperformance of exports, Zimbabwe has since the introduction of multiple currencies recorded a huge trade deficit, worsening the liquidity situation in the economy. Resultantly, banks would not have much for on-lending.

Chinamasa should know better than anyone else how the rising levels of non-performing loans have impacted on the fragile banking system.

Now averaging 15% against best practice of 5%, analysts caution that bad debts could be a time bomb in the financial services sector. So any move to coerce banks to lend more to unproductive sectors or political connections could have far-reaching consequences.

Governemt is taking a lackadaisical approach in engaging the West and courting foreign direct investment. That Zimbabwe is one of the lowest ranked investment destinations clearly is not a result of a conservative lending approach taken by banks, but politics gone bad.

Chinamasa’s attack on banks could explain the casual approach government has taken on the issue of its debt overhang which experts say represents 110% of the gross domestic product.

This debt has worsened the country’s risk profile resulting in local banks borrowing from international capital markets at a higher cost compared to more stable economies.

In light of this, one would expect less rhetoric and more action by the man entrusted to oversee this great country’s Treasury. Zimbabwe can rise again, but sober politicians are required at the Treasury chair.

18 COMMENTS

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  2. Ana Chinamasa busy scapegoating on sanctions,you cannot rig the economy,you claimed to have won the election and the government is all yours move the country forward and let’s see…..twumadhara twusinganyare …kkkkk

    • BHORA MUGEDHI

      rig election but not ECONOMY

      Mhere confirmed the closure saying he was pursuing other interests. But sources said Tsungai was pushed out of business by OK and Pick n Pay. Mhere disputes this pointing out that it was just the right time to try other things.

      Workers at the chain store have since received their terminal benefits and left. The supermarket was effectively closed from December 31 2013.

      BHORA MUGEDHI MUGABE

  3. Chinamasa has just proven that he does not understand economics at all…Needless to mention the Centre can not hold anymore ..companies are closing left right centre , a deadly dark cloud is hovering over Zimbabwe and the situation will be explosive well before midyear..

    For the banks to be able to offer lines of credit, they have to have cash depositors. Once the government destroys peoples trust that their money is safe in banks, then the banks have no capacity to make loans without excess cash on deposit. Blaming the banks for the effects of Mugabe and Gono’s foolish fiscal policies just shows how out of his depth Chinamasa is.

    The only solution Chinamasa is to hand the country over to the legitimate winners of the last election, then they can start the long and painful rehabilitation process. They at least will have the confidence of the World Bank etc. No-one rightly trusts the den of thieves in power now.

    • @Gudo- Pray tell us why you think the editorial is stupid..me thinks it is stupid to tell people something is stupid when you can not tell them why or how..No?

    • @Gudo, I don’t see why we shouldn’t call a spade a spade. So the banks are now controlled by a half dead MDC-T party. They were defeated in the last election and are out of the equation. Maybe you want to be the government spokesman?

    • Gudo, this is retrogressive thinking. Do not always think in terms of MDC or Zanu. Think as a progressive Zimbo who wants to see his country prosper regardless who is leading. Biti has bn vindicated.

  4. Shame on you Mr Chinamasa, companies that were giving loans, you destroyed them, talk of GDI and the like, brought down by Made, Chombo and company, iwe Chinamasa, chikwereti cheBAT (Northern Tobacco) wakapedza here, munoba nezita remusangano so who will lend you money, as long as Team Zanu PF is in play, no one will support you until you change to national idea. Mbavha dzose dzakahwanda nezita reZanu PF. its a fact, asingadi kubhadhara zvikwere nekuda kukohwa paasina kudyara anoti ndiri weZanu pf

  5. Mr Chinamasa, the only person left in Zim who still believes in the ‘sanctions’ excuse is your friend Chinotimba. Otherwise even children in creche are now too familiar and tired of this lame scapegoating. Are sanctions responsible for the ‘missing’ diamond revenue which you claim to have never seen a single dollar of? Are sanctions responsible for the massive corruption & looting in Government that has run this country to the ground? These are just a couple of examples. Give us a break!

  6. arikuda kubira muvakidzani wake mbudzi nehuku anoba nezita remusangano, arikuda kurara nemukadzi wasahwira wake akanaka kudarika wake anoshandisa zita remusangano ” zvose ndezva mbuya neHanda saka haungarambiri CDE,” shame shame ukadaro uri pamusoro pmutemo, hausungwi, so where are we heading towards

  7. The editorial is stupid because it is apparent the writer is suffering from the MDC-T disease yekuti varuza voti “Tongai tione” as if the nhamo inongobata ma supporter e Zanu. This is why despite its many failings I still voted Zanu. I don’t understand how someone can advocate kuti vanhu vemunyika make vatambure just kuti timuvhotere??? Why can’t you sell yourself to us takaguta tisina nhamo??
    Anyway the editor/writer is basing his article on emotions not facts. Chinamasa was referring to issue of why Banks could seek out lines of credit e 800 million and now only 40 million(not depositors money). With lines of credit banks play the role of middleman/agent. The lines of credit anowanika just in Africa/Middle East and Asia anogona kusvika more than 40 million but banks just don’t seem to be eager to do anything to move economy forward if ZANU is in power…..internal sanctions dzekutipunisha kuti takavhoterei Va Mugabe…That is why..hatitongwe ne masanctions kuti vhoterai MDC-T. If we are to do so it should be about policy not kutya sanction.

  8. its now time for reality not gimics varume and not day dreaming ,hatina gore takutowwudzwa ngano and we still have five years of this bul

  9. wezhira na chinamasa aripi masanctions acho. sei muchitaura zvekunyepa kuti sanction iwo ari ma travel bans. Ndookupererwa chaiko uku chinamasa. Like father like son. keep singing the old song of sanctions to yourself and children. we are tired of it.

  10. This Chinamasa guy has stopped surprising most of us…He is just going through the motions, not even he believes some of the things he says and thinks.

  11. Chinamasa is a star, he knows what to do, what to say and when to say it. The problem with some of us in Zimbabwe is that we are not used to hear the truth. People who are brutal frank like Chinamasa are hated. Why?

  12. Chinamasa is a lawyer, he lies and is are as good as the people he represent (Zanu-mob). He is there to carry out a contract.

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