H1 productive sector loans up 80 percent to $20 billion

LOANS to productive sectors of the economy have increased by more than 80 percent to $20 billion during the first half of the year, according to the Reserve Bank of Zimbabwe (RBZ).

The productive sectors require loans to boost domestic output, which is critical in reducing the country’s over dependency on imported products as well as creating jobs.

Latest data from the Central Bank shows that the bulk of the loans allocated to the productive sector were disbursed to the agriculture sector, which accounted for 26,97 percent. This was followed by financial services at 16,75 percent, manufacturing (13,69 percent), and distribution (8,21 percent) while commercial, and mortgage, among others also had their share.

“Loans to productive sectors of the economy constituted 83,69 percent of total banking sector loans as at 30 June 2020,” reads the report.

The monetary authority also said the quality of the banking sector loan portfolio continued to improve, as reflected by improvement in the non-performing loans (NPLs) to total loans ratio, from 1,75 percent in December last year to 1,03 percent in June.

Economic analyst Mr Peter Mhaka said companies have strong appetite for funding to enable them boost their efficiencies.

“It is a step in the right direction if companies, particularly those in the productive sector, are able to secure loans to boost their operations.

“It is our hope and belief that the trend will continue going forward because the net impact of lending the productive sector is employment creation through improved efficiencies,” he said.

Meanwhile, as at week ending August 21, reserve money supply declined by $384 million (3,3 percent) to $11,4 billion.

The decrease in reserve money, which was largely reflected in a fall of $645 million in banks’ liquidity (RTGS balances at RBZ), was largely due to the liquidity withdrawing impact of an increase in Government deposit at the RBZ by $1,3 billion, over the week under review.

Currency issued and other deposits rose by a combined $156,94 million over the week. — chronicle.co.zw

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