HARARE – Up to five Zimbabwean banks are “ill”, but this will not have an impact on the overall sector due to their small size, Finance minister Patrick Chinamasa said yesterday, without naming the stressed lenders.
Local banks are struggling due to inadequate capital and growing non-performing loans, which has prompted the central bank to consider establishing a body to take over bad loans.
Zimbabwe is struggling to lure foreign investors who want to see consistent economic policy and a stable political environment before committing funds. Chinamasa told journalists that the central bank had this week introduced an interbank market, where banks borrow from others with surpluses, for the first time since 2009 when the country ditched its currency in favour of foreign money.
Zimbabwe is battling a United States dollar shortage due to a lack of inflows as foreign investors remained concerned over President Robert Mugabe’s economic policies.
“The three or four or five banks are ill, because of their size. It’s not contagious on the general financial services sector,” Chinamasa told journalists. He did not give details.
International lenders like the World Bank and International Monetary Fund (IMF) stopped lending to Zimbabwe in 1999 when Mugabe’s government defaulted on its loan repayments.
Chinamasa said the government had carried a review of its foreign debt, which he put at $8,9 billion as of last December, lower than previous estimates of more than $10 billion. The African Development Bank (AfDB), which is owed $655 million, has taken the lead role to have Zimbabwe’s debt cancelled to allow the country to access fresh and cheaper loans to rebuild ageing infrastructure.
Chinamasa said he did not expect any new foreign loans in the next two to three years, adding that Zimbabwe would need to be in good standing with institutions like the AfDB, World Bank and IMF if it was to borrow more.
“To do that, we need to pursue policies that show that we are building capacity for economic recovery. If we are doing the wrong
things, silly things, then of course you can’t be in good standing,” he said.
One of the policies was to clarify Zimbabwe’s controversial black economic empowerment law that forces foreign-owned firms to sell at least 51% shares to locals, Chinamasa said.