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Harare - Commercial banks in Zimbabwe - including units of Standard Bank, Nedbank, Barclays and Standard Chartered - that have battled tight liquidity challenges could get some respite from the reintroduction of an interbank market the central bank chief said will kick-start next week.
The interbank market the country is reintroducing is backed by a $100m loan facility advanced by Afreximbank a year ago. However, the project to reintroduce the facility, which helps banks support each other with hard cash, had stalled over the past year.
Central bank chief John Mangudya said in Harare on Thursday that most of the banks have now signed for it, although executives at Nedbank-owned MBCA Bank have said their units are in a sound liquid position.
Barclays Bank’s unit in Zimbabwe has also said that it has adequate liquidity cover.
“I am glad to say that only two banks are left to sign the papers and we are expecting the interbank market to be operational by the end of this month,” Mangudya said on the sidelines of an economic symposium organised to tackle issues afflicting the country’s economy.
The umbrella body for the country’s manufacturing companies, the Confederation of Zimbabwe Industries, convened the symposium to gain insight on how the government is planning to fix the business operating environment.
Zimbabwe’s banking sector, a crucial cog in the country’s bid to raise waning productivity, plays a pivotal role as a conduit of capital.
Executives attending the symposium told Fin24 that the financial services industry has to be fully “functional and crisis-free to help improve confidence by investors and financiers” willing to advance money to industry and manufacturing firms.
Coins trigger fears of Zim dollar's return
Zimbabwean banks have not had an interbank market since 2009, when the country ditched its own worthless currency to adopt a basket of multiple currencies comprising the US dollar, the rand and other world currencies.
Earlier this year, the country introduced bonded coins to help ease shortages of smaller currency denominations although they have met initial resistance by a local market apprehensive about the potential reintroduction of the Zimbabwe dollar.
READ: Banking body welcomes new Zim coins
“We delayed the resumption of the interbank market to allow banks to first go through the papers with their lawyers. It’s more of a members’ club and it operates through agreements,” Mangudya added.
Most Zimbabwean banks are battling non-performing loans that have ballooned to 18% for the industry but Nedbank’s MBCA Bank and Barclays Zimbabwe are staying afloat, managing non-performing loans ratios below 5% after adopting prudent lending measures.
READ: Zim bad debt set to rise even further
The International Monetary Fund wants Zimbabwe to speedily set up operating frameworks for a state-owned asset management company expected to mop up and house bad loans in the banking industry.
