Credit bureau needed in Zimbabwe

Published: 10 June 2013

TRUWORTHS Zimbabwe says the absence of a credit bureau in Zimbabwe was hampering efforts to reign-in bad debtors.

Speaking at the presentation of the company's financial results for the interim period to January 6 2013, Chief Executive Officer Themba Ndebele said it was difficult for companies to control their "bad debts" as there was no bureau to assess credit risk more accurately.

"The absence of a credit bureau is the reason why bad debtors are increasing. I am not saying in countries where the bureaus exist there are no bad debtors. They will always be there but not as in countries where it is not (in existence)," he said.

"Everyone has borrowed from someone. So, no matter how tight one is on debt, bad debtors will always be there but could be less if there was a credit bureau," Ndebele said.

He said the existence of a credit bureau would help financial institutions and companies that offer credit for services to make informed lending decisions and also lower operational costs.

Ndebele said the number of accounts increased by 11,2 percent over the comparative period to 74 563 accounts. The trade receivables book had performed in line with expectations.

As of January 6, 2013, 85,5 percent of the group's account holders were able to make purchases compared to 87,1 percent in the prior comparable period.

"Net bad debt as a percentage of credit sales was 0,1 percent compared to 1,8 percent in the prior period due to better collection and recoveries," Ndebele said.

During the period under review, the provision for doubtful debts as a percentage of gross trade receivables was at 4,7 percent compared to 5,2 percent the previous comparative period. However, the dollar value of the provision increased by 19,1 percent over the same period last year.

- fingaz

Tags: Truworths,