Zimbabwe’s cost of funds is now pegged at 12 percent per year from 35 percent in 2009 as banks comply with calls from regulatory authorities to reduce lending rates in order to stimulate production.
In the past the high cost of borrowing has been militating against growth of companies leading to low production, underutilisation of productive sectors and company closures.
With the ZBC News being reliably informed banks are complying with the Reserve Bank of Zimbabwe’s (RBZ) interest rate cap of 12.5 percent per year from an all time high of 35 percent in 2009, there is optimism of industry revival, said a chartered accountant with Grant Thorntorn Mr Tonderayi Mukubvu.
“Tthere is optimism of growth and we hope that can translate into increased growth of firms and restore viability in the future,” he said.
An industrialist Mr Shephard Kembo said more can still be done to reduce the cost of lending especially considering that the electronic channels of banking have reduced the cost structures.
“What more can be expected to unlock the funding structures to facilitate growth that has seen a significant revival of firms in the future to sustain viability trends,” said Mr Kembo.
Although the costs of borrowing are still high in Zimbabwe compared to regional economies at five percent per year with international banks charging an average of three percent per annum, industry and commerce are still borrowing as evidenced by the country’s financial sector’s loan to deposit ratios that are above 60 percent.