banksss.jpgOfficial data on the state of the banking industry has shown that local banks have contributed 60% of total loans advanced to industry and households during the first quarter of this year.

In our feature, ZBC News crew analyses this trend which has raised debate in the local financial industry as the bigger foreign banks have not disbursed enough loans proportionate to the assets they hold compared to the indigenous financial institutions.

Figures show that in the first quarter of this year, $1.81 billion was advanced to local industry and households as loans.

Of this amount, local banks contributed nearly $1.1 billion which translates to around 60% of total loans issued.

The same figures however show that total deposits for the duration under review increased to $2.58 billion with three externally owned financial institutions out of the four commercial banks accounting for 60% of the deposits.

This has led some to question why the foreign owned financial institutions are coming up with tight lending schemes despite sitting on huge volumes of deposits.

Zimbabwe Institute of Management Chief Executive Officer, Mr. Roderick Kadungure says it is high time externally owned financial institutions focus on playing a leading role in financing economic activities.

Kadungure said: “The current situation is worrying to the extent that we hope such banks can change their attitude.”

The said banks on the other hand are arguing that their cautious lending policy is a result of the need to avert defaults as well as managing risks on the back of liquidity shortages.

However, Zimbabwe National Chamber of Commerce Vice Chairman, Mr. Clever Madzara says the foreign banks are shooting themselves in the foot as they are likely to lose their markets.

“There seems to be something sinister about the entire issue and government should launch a probe,” said Madzara.

While local banks are being commended for their efforts to finance industry and commerce in-spite of the financial challenges, an economist Mr. Brains Muchemwa believes the failure by the foreign owned banks to avail more loans for economic growth is mainly due to ill informed decisions about the state of the economy from their owners abroad.

Muchemwa said: “Owners of such banks should come and see for themselves about the Zimbabwean situation rather than depending on false information.”

Some have however questioned the quality of financial analysts working for the foreign banks accusing them of failing to avail accurate analysis.

Though the debate rages on, what is clear is that all the financial institutions operating in the country derive some benefits from the local populace.

It therefore follows that local industry deserves some respect otherwise these banks might kill the goose that lays the golden egg.