|Bank loans increase|
|Wednesday, 01 August 2012 18:31|
Banking sector loans and advances have increased from US$2,7 billion in December 2011 to US$3,27 billion in June 2012, representing an 18,5% rise.
This follows an increase in bank deposits, which went up from US$3 billion to US$4 billion between December 2011 and June 2012.
Commercial banks gave out 89,9% of the loans amounting to US$2,712 billion while loans from building societies made up the remainder.
However, the majority of loans went to individuals in a development described by the Reserve Bank of Zimbabwe (RBZ) Governor, Dr Gideon Gono as worrisome as the loans are presumed to be consumption expenditure.
“There is a dangerous trend in the credit sector of the economy. Loans to individuals rose from 8,5% of total loans to 18%, surpassing manufacturing and agriculture. If you study the trend, this is the making of a crisis, just like what happened before the Eurozone crisis,” said Dr Gono.
Loans to the agriculture sector declined from 18,6% to 15%, while distribution also went down to 9,4% from 13%.
Dr Gono said short term lending coupled with subdued inflows has deprived the economy of investment in capital intensive projects which are important for sustainable economic development.