via Lending to private sector marginally up | The Herald November 1, 2013
BANK credit to the private sector marginally rose 0,61 percent in August this year from US$3,67 million in July to US$3,69 million, says the Bankers Association of Zimbabwe.
The credit was mostly dominated by loans and advances which accounted for 86 percent. “Cognisant of the impending agricultural season, the loans and advances were skewed mostly towards agriculture which accounted for 19,05 percent of all loans and advances,” said BAZ.
Local banks have earmarked a total of US$620 million for the 2013/14 agricultural activities.
The amount is meant for, among other activities, fertiliser production, seed production, cattle ranching, horticulture, fruit production, poultry and growing of various crops.
The bulk of the funds have been earmarked for tobacco growing, accounting for around 50 percent of the total earmarked resources. Other major activities which are to benefit from these resources are cotton (7,55 percent), maize (4,87 percent), seed houses (4,88 percent), horticulture (3,52 percent) and sugar cane (6,94 percent).
“Given the critical importance of the agriculture sector, adequate funding for the sector is important. Properly funded agriculture is critical to economic growth, liquidity generation and food security for the country.”
Other sectors that benefited were the manufacturing sector (17,12 percent), distribution (15,99 percent) and households (16,55 percent). All other sectors of the economy shared the remaining 31 percent. BAZ said the distribution of the loans and advances reflected the importance of the different sectors potential to drive economic growth.
Credit to the private sector was mainly utilised for asset purchases (41,23 percent) and inventory build-up (34,74 percent). Loans and advances utilised for fixed investment activity have remained low, with the procurement of plant and equipment accounting for 2,95 percent and pre- and post-shipment financing at 2,21 percent, of total loans and advances.
“The low amount of loans and advances earmarked for procurement of plant and machinery is reflective of the short-term nature of the financing,” said BAZ.