Zimbabwe Agency Promotes New Low-Interest Loan Program.
The Zimbabwe Investment and Development Agency urges businesses to seek bank funding under a new export support plan. The program aims to make local products more competitive.
The Reserve Bank of Zimbabwe launched its Targeted Finance Facility last December. Banks can borrow at 20 percent interest and lend to clients at up to 30 percent. This rate sits well below the standard corporate lending rate of 43 percent.
"The facility may improve margins and profits for local companies," ZIDA stated in its recent investor bulletin. Loans must be repaid within 270 days and come with strict security requirements.
Borrowers can access funds in Zimbabwe Gold currency, known as ZiG. They have the option to repay in ZiG or foreign currency at current exchange rates.
Banks face tight money supplies in both US dollars and ZiG. This has limited lending and pushed dollar interest rates near 20 percent, according to banking officials.
Bankers Association President Lawrence Nyazema points to these money constraints as the main reason for higher rates. The central bank's strict policies have reduced available lending funds.
Finance Minister Mthuli Ncube supports the current money management program. He says it protects Zimbabwe's currency by limiting excess funds that could drive up prices.
Central Bank Governor John Mushayavanhu cited inactive bank-to-bank lending as a key issue. Banks hesitate to lend surplus funds to each other despite earning zero interest on deposits with the central bank.
"Money stays with a few banks instead of moving through the system," Mushayavanhu said. He noted banks could earn more by lending to other banks rather than keeping idle funds with the central bank.
The Zimbabwe Investment and Development Agency urges businesses to seek bank funding under a new export support plan. The program aims to make local products more competitive.
The Reserve Bank of Zimbabwe launched its Targeted Finance Facility last December. Banks can borrow at 20 percent interest and lend to clients at up to 30 percent. This rate sits well below the standard corporate lending rate of 43 percent.
"The facility may improve margins and profits for local companies," ZIDA stated in its recent investor bulletin. Loans must be repaid within 270 days and come with strict security requirements.
Borrowers can access funds in Zimbabwe Gold currency, known as ZiG. They have the option to repay in ZiG or foreign currency at current exchange rates.
Banks face tight money supplies in both US dollars and ZiG. This has limited lending and pushed dollar interest rates near 20 percent, according to banking officials.
Bankers Association President Lawrence Nyazema points to these money constraints as the main reason for higher rates. The central bank's strict policies have reduced available lending funds.
Finance Minister Mthuli Ncube supports the current money management program. He says it protects Zimbabwe's currency by limiting excess funds that could drive up prices.
Central Bank Governor John Mushayavanhu cited inactive bank-to-bank lending as a key issue. Banks hesitate to lend surplus funds to each other despite earning zero interest on deposits with the central bank.
"Money stays with a few banks instead of moving through the system," Mushayavanhu said. He noted banks could earn more by lending to other banks rather than keeping idle funds with the central bank.
