The Reserve Bank of Zimbabwe has lifted its ban on lending activities by banks after companies stopped advance payments to suppliers and credit sales, grounding key agricultural and other economic activities.
The step to stop lending facilities, government officials say, was necessary to deal with excess liquidity on the market, which was fuelling the parallel market foreign currency exchange rates. The Financial Intelligence Unit has subsequently asked banks to avail their suspense and other internal accounts for audit.
Now, John Mangudya, governor of the Zimbabwean central bank, has advised of the lifting of the suspension of lending activities by banks. “The (central) bank wishes to advise the public that the temporary suspension of lending services by banks has been lifted with immediate effect,” Mangudya said Tuesday morning.
However, the lifting of the suspension on lending by Zimbabwean banks “does not apply to those entities that are under investigation by the Financial Intelligence Unit (FIU) for abusing loan facilities to the detriment” of the economy, added Mangudya.
Companies such as Tongaat Hulett Zimbabwe had stopped advance payments to cane farmers, citing the unavailability of credit facilities from banks. Listed companies, including Dairiboard Holdings, had also started to cancel dividend pay-outs, citing the need to preserve cash owing to the absence of credit due to the suspension of lending.
University of Zimbabwe economics professor Gift Mugano said as much as 76 percent of total loan advances in Zimbabwe were advanced towards the “production sector”, which demonstrates that “loans being advanced by banks are not for speculative purposes” as alleged by authorities.
The Reserve Bank of Zimbabwe has threatened to publicly disclose the names of individuals and corporates who were advanced large amounts by local banks. The local unit of exchange has continued to lose value on the parallel exchange market while the government has shifted to a willing-buyer-willing-seller interbank exchange rate regime.
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