THE Zimbabwe Asset Management Company (Zamco) says it has cleared close to ZWL$300 million non-performing loans out of ZWL$1,1 billion.
Zamco, is a special purpose vehicle with a 10-year life span created to clear non-performing loans (NPLs) that were borne out of an insidious culture of dishonouring credit obligations, which choked banks from providing fresh loans to the market.
Created by the Reserve Bank of Zimbabwe (RBZ) in 2014, Zamco has since 2015 been assuming mortgage bonds, non-insider loans and NPLs for companies in good stead to clean balance sheets of financial institutions.
Speaking by telephone from Harare yesterday, Zamco chief executive officer Dr Cosmas Kanhai noted that in the 2019 fiscal policy statement, the Minister of Finance and Economic Development, Professor Mthuli Ncube, stopped any further acquisition of NPLs.
“We are now resolving the NPLs by taking in measures to make sure the loans are repaid and from our last report that we did in August this year, we have resolved almost ZWL$300 million NPLs from a total of $1,1 billion NPLs,” he said.
Dr Kanhai said Zamco has set itself a target to clear at least ZWL$140 million of NPLs each year so that by the end of 2025 the exercise would have been completed. He said Zamco surpassed its annual NPLs clearance target for this year largely because of the prevailing economic situation.
“Already before the year ends, we have surpassed our NPLs annual resolution target of $140 million. This achievement is mainly to do with inflation because with inflation, a person can dispose of property at higher value to settle the debt.
“The inflationary pressures being experienced played their part in the resolution of NPLs because people realised higher values after the disposal of their properties whose proceeds were used to offset their loans,” said Dr Kanhai.
He would not be drawn into revealing names of debtors that have settled the NPLs that Zamco took over citing professional reasons. Of late, Dr Kanhai said the bulk of the debtors were selling their properties through private treaties to pay for the NPLs partially or fully.
Through the debt resolution initiative such as debt-asset swap and debt-equity conversion, Zamco has also been restructuring some of the indebted companies. At the time the asset management company was created, NPLs ratio stood at 20,14 percent and according to a report from RBZ, the figure had been reduced to 6,22 percent as at September 30, 2018. The figure compares favourably with the international benchmark of five percent. — –herald.co.zw