'Banks should focus on savings deposits'

 'Banks should focus on savings deposits'
Published: 18 October 2019
RESERVE Bank of Zimbabwe (RBZ) deputy governor Jesimen Chipika has urged banks to focus on savings deposits in order to enhance financial support to the productive sectors.

Productive sectors of agriculture, mining, manufacturing, construction and mortgages are financed by local banks through long-term loans.

As at June 30, 2019, local banks had total deposits valued at $16,9 billion, three quarters of this amount was used to finance the productive sector.

"Our hope is that we can shift the nation to the savings mode - that is very key and critical. It is the savings deposits that banks can use to loan, on a long-term basis, to the productive sectors. Our deposits are such that you can come and demand your money any day and any time and that makes it difficult for financial institutions," Chipika said.

She said this in an address at the Zimbabwe Independent Banks and Banking 2019 Survey awards ceremony in Harare yesterday.

"There is high demand for loans in the country, particularly because we are trying to move every micro project, small projects, and media businesses and so on to look for formal financing. So far, we are happy with the sectorial distribution of the loans, because almost three quarters of the loans are going to the productive sector, mainly agriculture and manufacturing. We are also seeing quite a big chunk going to mortgage."

Chipika added that the private sector was key to the growth of the country's economy and government had laid a sustainable foundation for the private sector economic transformation.

According to government's 2019 mid-year review and supplementary budget, credit to the private sector remained subdued, growing by 16,20%, from $3,80 billion in May 2018 to $4,4 billion in May 2019.

Chipika advised financial institutions and people in general to put efforts in minimising the adverse inflation expectations and protect the local currency in order to stabilise the economy.

"As long as the people of this country and even the foreigners that we want to attract to come and work with us do not have confidence in what we are doing, the macro-economic environment cannot stabilise," she said.
- newsday
Tags: rbz,


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