ZNCC happy with quantum of loans extended to productive sector

04 Jan, 2023 - 00:01 0 Views
ZNCC happy with quantum of loans extended to productive sector ZNCC

eBusiness Weekly

Business Writer

THE Zimbabwe National Chamber of Commerce (ZNCC) has lauded growth in loans extended to the productive sectors in 2022, saying the development will encourage the country’s economic growth.

Last year, more than 73 percent of the loans went to the productive sector, making it a relatively better year in terms of lending compared to the prior year.

Improved lending to the productive sectors usually translates to increased investment, which leads to better income inflows for the country in terms of the gross domestic product.

The economy had in previous years been experiencing funding limitations largely due to tight lending conditions and of lack of long-term loans.

According to ZNCC’s 2022 state of industry and commerce survey, loans and advances more than doubled between December 2021 and June 2022.

“What is more encouraging in these financial sector statistics is that a significant proportion of the loans were channelled towards productive sectors of the Zimbabwean economy constituting around 76,29 percent.

“However, bank lending was suspended for a period of at most two weeks in May 2022 citing speculative behaviour by borrowers which were fuelling the parallel market activities,” said ZNCC in its sector survey.

In its third quarter banking sector report, the Reserve Bank of Zimbabwe ( RBZ) said banking sector loans and advances increased by 68,3 percent to US$1,1 trillion as of 30 September 2022, from US$603,14 billion during the second quarter.

The increase was attributed mainly to the translation of foreign currency-denominated loans which continued to dominate banking sector loans.

“The quality of the banking sector loan portfolio remained strong as measured by the non-performing loans (NPLs) to total loans ratio of 1, 41 percent as at 30 September 2022, against the international threshold of five percent.

“The NPL ratio improved from 1,50 percent reported as at 30 June 2022,” said RBZ in the banking sector report to September 2022.

Credit enhances economic activities by allowing businesses to invest beyond their cash on hand, and generally.


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