Zimbabwe needs to address country risk issues

Zimbabwe needs to address country risk issues
Published: 16 January 2014

Zimbabwe needs to address the issue of country risk so that financial institutions can be able to access cheaper external credit to finance local firms who are reeling under the burden of high interest rates on loans, NMB bank chief executive Mr James Mushore said.

Speaking at the Mandel-Gibbs Economic Outlook symposium yesterday, Mr Mushore said local banks were failing to access the same money that their regional counterparts were accessing from international finance institutions due to the high risk associated with the country.

"When we look for money, we have 20 minutes talking about country risk, 10 minutes talking about our bank and this has often meant that Zimbabwean banks cannot access the same money as banks in other countries," he said.

He said policy inconsistencies had negatively affected external financial institutions' perception of the country and this meant local banks could only get short-term money at high rates which cannot be given to start up businesses.

"Zimbabwe is dominated by SMEs, a majority of whom supply products and raw materials to the big companies.

Most SMEs do not have access to finance, and if they do, it's costly and under stringent conditions due to perceived high risk profile of this economic group," he said.

Mr Mushore said if Government fixes the problem of country risk, then banks would be able to fund the informal sector.
- bh24

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