The Reserve Bank of Zimbabwe (RBZ) has reversed President Emmerson Mnangagwa’s suspension of bank lending activities some 10 ago which was supposedly meant to rein in speculative borrowing on the market driving exchange rate movements.
Business and industry players, including the Zimbabwe National Chamber of Commerce (ZNCC) were quick to castigate the policy measure as retrogressive to the economy where entities were already struggling obtaining adequate working capital.
As a result, a shortage of basic commodities has emerged on the market with those with stock pushing prices further up.
In a statement released this morning, RBZ said the suspension will not apply to those entities that are under investigation by the Financial Intelligence Unit (FCI) for abusing loan facilities.
“Further to the circular the Reserve Bank of Zimbabwe issued to banks on 9 May 2022, the Bank wishes to advise the public that the temporary suspension of lending services by banks has been lifted with immediate effect. The lifting of the suspension does not apply to those entities that are under investigation by the Financial Intelligence Unit (FCI) for abusing loan facilities to the detriment of the economy. The FIU has accordingly advised all banks of the affected entities,” the Bank said.
The government’s haste to reverse its policy within a week reveals a lack of stakeholder engagements and authorities’ panic, which does not bode well for the bank’s efforts to restore market trust.
There are concerns that the country could be sliding back into pre-dollarization levels of 2008 when inflation reached astronomical levels.
A combination of poor and inconsistent policies, imported inflation from the Ukraine conflict and lack of confidence in the local currency continue to push prices of goods and services up.
According to research firm, Morgan and Co analyst Batanai Matsika there is a lot of firefighting measures which are affecting productive sectors given that government wants to defend its deteriorating Zimbabwe dollar and that will lead to the shrinking of the economy.
“The impact definitely is going to be negative on GDP growth prospects because productivity is key. A number of houses are reviewing GDP growth prospects from 4.5% to 3%. So there is a concern of capacity utilization,” he said.
