via Banking sector will come out of the woods: Mangudya July 1, 2014 by Veneranda Langa
RESERVE Bank Governor John Mangudya yesterday told Parliament that he was optimistic that the banking sector will soon come out of the woods, adding that the liquidity challenges currently blighting the sector were caused by the negative perceptions created by people who failed to repay their loans.
He told the Parliamentary Portfolio Committee on Finance and Economic Development that banks were in a sound state and it was only those people who took loans in 2009 and failed to re-pay them who undermined the appetite for lending and caused hitches in the circulation of cash in the banking sector.
“We are moving back to basics whereby we just do our core functions as an institution, and the liquidity conditions in this country are tight, but to us it is a symptom of negative perceptions which have affected confidence levels,” Mangudya said.
Mangudya said the Reserve Bank of Zimbabwe was planning to establish a National Credit Reference Bureau which would enable banks to detect bad debtors.
He also said the RBZ Debt Assumption Bill which settles the $1,35 billion RBZ debt was gazetted and is now before Parliament, adding it would help the RBZ to start on a clean slate and go back to basics.
“We have made progress in moving the government bank accounts from CBZ to RBZ and between now and July 15 we should be able to move the accounts. We are also mobilising resources so that at least we are able to assist banks in need of funding. We want to protect depositors’ funds so that they are used for those purposes and we are fund-raising to ensure we are lenders of last resort.
“The country should continue with the multi-currency system. We cannot decrease capital requirements of $25 million for banks and we want to put more emphasis on quality of assets of a bank and that is why we are establishing a credit reference bureau. We also believe Finance minister Patrick Chinamasa is working on demonitisation of the Zimbabwean dollar,” he said.
Mangudya said the use of the recently introduced multi-currencies like the Chinese yen, Indian rupee and Japanese currency had been very low with few bank accounts opened in those currencies although it was permissible.
COMMENTS
The liquidity challenges are caused by the fact that Zimbabwe spends much more on imports then it earns on exports. It’s simple math, and when I hear people in decision making positions pointing a finger at specific groups of individuals or companies I know that they are either ignorant of economics, or more likely, they are trying to deceive the people, to hide their own party’s greed and incompetence.
If you want to solve the liquidity crisis, repeal the indiginization act and create policies that are investor friendly, so more money can enter the system. Then make a real effort to dismantle the patronage system and come down hard on corruption. Throw a few Ministers in jail and confiscate their money. FInally, reduce the taxes on the business sector and liberalize the employment regulations so that businesses can be more competitive in the global marketplace. Once you do all that, you will slowly start to see an increase in economic activity which will eventually solve the liquidity crises.
By the way, the Minister of Finance is a coward to profess ignorance of how these things work. He just doesn’t want to pay the political price for facing the truth. He claims he needs to study the problem and it might be a while before he figures it out. But that’s his job. If he can’t do it because he doesn’t understand it then fire him! Mr. President, are you awake sir?
Spot on DL. If the people have no jobs who then banks? If those that are working don’t trust banks who then banks? There is absolutely nothing wrong with the banking sector. The problem is with the current Administration if you can call it that. Bad policies. Corruption. Patronage. Stubbornness. Sheer stupidity.The reserve bank was left in a terrible state. It should be discontinued. The Minister of Finance should resign. The thief Chombo should be arrested and his assets seized. The other thieves should also be arrested.
Don’t forget Mugarbage!
Mmhh and this is the head of our Reserve Bank?
Nationalise them!!! Then they will have money for free!!!!!! No more worries about repayment.
Zanupf waffle. Spot on dl