via Chinamasa attacks local banks – NewsDay January 16, 2014 by Tarisai Mandizha
Finance minister Patrick Chinamasa has attacked the banking sector, blaming some financial institutions of attempting to drive the economy on its knees since the adoption of multiple currencies five years back.
Addressing delegates attending an economic outlook symposium organised by Mandel Training Centre and the University of Pretoria-based Gordon Institute of Business Science, Chinamasa said financial institutions should extend more credit towards the thriving informal sector as Zimbabwe’s economy transforms.
Chinamasa accused some banks of imposing sanctions on the economy by limiting lines of credit.
“We cannot have a situation where the majority of our population has little access to the economy and no access to capital,” Chinamasa said.
“They used to organise lines of credit of up to $800 million, but now it is down to $40 million a year which is suggesting they are strategising an exit out of our economy . . . I get this feeling that these banks are imposing sanctions onto their own country.
“Our economy is now an informal economy, you can’t deny that there are more economically active people in the informal sector than the formal sector. There are less workers now through closures of those factories and mines. They (people) are keeping those funds under the pillows.”
According to a Finscope study, 40% of the Zimbabwean population was unbanked.
Statistics show that Zimbabwe’s financial industry has more than $4 billion which remains unbanked as financial institutions fail to restore depositor confidence.
Turning to the mining sector, Chinamasa said the capital-intensive industry, now the key driver of the economy, should overhaul their business models to ensure that they significantly contribute to the economy. Mining now accounts for over 60% of total exports.
“We need recapitalisation of our mines and we need better management of our mines. We have been overtaken by Tanzania in terms of gold production,” the Finance minister said.
“I know people say don’t find excuses, but Zimbabwe is on sanctions, but the issue is we should overcome them, go around them. If there is patriotism we can overcome, other nations have overcome sanctions.”
Total banking sector deposits, according to the Reserve Bank of Zimbabwe, was up 4,52% to 4,62 billion as at October 25 2013. The loans to deposit ratio decreased to 81,67 from 83,23% during the period under review.
COMMENTS
Banks lend on the basis of project viability, the higher the perceived risk the lower the loans. Have you have heard about the GMB loan which brought down Trust bank? CSC and Air Zim non performing loans caused chaos in the banking sector. What security does the informal sector have, perhaps wives and kids…..not good enough……informal sector is not viable and credit worthy. 99 year leases on farms make such security zero value. You are daft Minister, you are a shame.
Chinamasa does not have a clue how to run a modern economy.
I’m shocked and surprised the banks are still lending $40 million a year – as anyone lending money to businesses in Zimbabwe ‘governed ‘ by a Zanu PF military dictatorship needs their head read !
What’s the fastest way to become a millionaire in Zimbabwe? Start off as a billionaire and invest in a indigenised Zimbabwean business!
What an embarrassment Chinamasa, instead of telling eveyone to change their business models how about you and ZANU(PF)change theirs i.e. no more rape and plunder and corruption, implement the rule of law and property rights.No I guess earning an honest dollar is too hard, rather steal the fruits of everyone else!
Sanctions….how boring and what an imbecile to think anyone believes a word he says!
Who invited this man to address people with this rubbish he is talking abt, blame your government which has stupid policies you are problem not the banks
Sounds like Zanu PF. Blame someone else for the mess.
The international,regional and national community just do not TRUST YOU as a FINANCE Minister.YOU are not honest individually and as a Government.Maface enyu ayo akangobva MuZANU Kana MuGovernment Mari yopinda MumaBank Nemunyika.
You reap what you sow.
You can rig an election but you can’t rig patriotism and economic fundamentals. When you rig an election you give yourself a false sense of how many people actually support you. If the majority of people that support you do not even exist, how can they be economically active. And yet you insult those that are economically active soon after your “landslide victory” and promise to deal with them. Good luck!
The worsen economy is making our leaders unsafe and trapped in their own making.Why should the banks waste depositors’ money giving it to the people who have no immovable properties for security? All the problems the country is facing were caused by the ruling party, they should find ways to rig the economy if they can.The minister should know that patriotism is earned not forced to an individual.Most Zimbabweans have lost the spirit of patriotism due to the actions of the government which divides people on racial grounds.You blame private banks, but no mention of the big devil who took all our savings overnight!!Hypocrite.
If at all this government had its people at heart they would resign today because they haven’t got a clue on how to solve this one. Yes you can rig an election but the economy is something else CHINAmasa. Dont blame your failures on the banks or maybe be this is your way of taking them over.
The only way Zanu pf could ever begin to run the Economy properly was if they had fresh faces with no skeletons in thier cupboards. How do you prosecute someone who knows all the illegal things you’ve done.That saying set a thief to catch a thief has no bearing when it comes to these guys. They know so much about each other that they can’t report each other. Patrick is no differant. He has used his position to benifit himself so much using these very same banks that he is powerless to do anything about it other that shout out in the galleries. But then again how many fresh faces can Zanu PF raise. And how many will have no skeletions in they cupboard as with Zanu coruption is handled at all levels from the big boys to the Jabulane Sibanda’s the Chinotomba’s to even some card carrying members.
better the minster starts the ball rolling by lending the people money from his bank account so the banks can see how it should be done perhaps he could get his fellow minsters to chip in aswell
All the government, of which Mr. Chinamasa is a member of, should come up strategies to revive industry? How can a country openly encourage the informal sector? How does the government then plan to collect taxes from the informal sector!
It is always a big problem when a government or anybody’s only solution is mistakenly based on what “should” and “must” be done by others.
If this minister and his government does not have their own solutions and are having to solely depend on other peoples’ banks, then “tough luck.”
I will continue to bank in my pillow for as long as I have concerns that are based on what is going on around me.