President laments banking sector rot

Chronicle Reporters
GOVERNMENT’s recent adoption of tough economic measures is in response to mischievous behaviour by some economic players and syndicates who are bent on sabotaging the economic transformation achieved so far under the Second Republic, President Mnangagwa said yesterday.

In the face of such adverse behaviour, which has a crippling impact on ordinary people’s lives, as in the case of wanton price increases and unjustified exchange rate volatility, which defies sound economic fundamentals, the Government has the mandate to take corrective action in order to protect its citizens, he added.

Since May this year, the Government has taken tough policy steps aimed at consolidating general fiscal and monetary environmental stability by curbing speculative market behaviour, trimming money supply growth to preserve local dollar value and exposing culprits behind the rot.

This has seen the Reserve Bank of Zimbabwe ordering banks to temporarily stop lending in May, introduction of forex transaction tax and recently through increasing interest rates to 200 percent to curb speculative borrowing, introduction of gold coins to ease US-dollar demand, among others.

Addressing the business community during a meeting in Kwekwe, President Mnangagwa said speculators, working in cahoots with some big financial services players, have been stoking inflationary pressures through borrowing Zimbabwe dollars at below-inflation interest rates and using the money to drive foreign currency gains, mainly through the parallel market platforms.

After eight days of a temporary lending ban, President Mnangagwa said Government observed that out of 16 banks, only four were operating within the confines of the law and that the rest were involved in illicit and mischievous dealings that were linked to inflation spiral.

Responding to a contribution by Dendairy managing director, Mr Darren Kotze, who had complained about RBZ raising its main policy rate to 200 percent, President Mnangagwa said: “You complained about 200 percent interest rate. It’s intended to cure misbehaviour by the financial sector. Banks were formed to lend to people but they engaged in mischief that was affecting the economy.

“We closed lending for eight days and within those days we discovered the rot in the banks. Out of the 16 banks only four passed the test. Others were in deep corruption,” he said.

After this expose, the President said Government was faced with a dilemma on what to do with the corrupt banks for fear they might fold.

“After we found the rot in the banking sector, there were two possibilities, one to expose them and the other to punish them. We could not punish them because you (clients) were going to withdraw all your money from those banks and they would fold. So, the banks pleaded with us to just punish them outside of the eyes of the public and that is what we are doing to them,” he said.

Likening the mischief and speculative purposes by such economic saboteurs as a “sickness”, the President said such behaviour needs some form of medicine for it to be cured.

“We should focus of the good things we have achieved as the Second Republic than just cry about the problems. You will find that some policies we implement as the Government are aimed at curing a disease that will be affecting the economy,” he said.

“Some of the policies are aimed at protecting the members of the public from mischievous individuals and syndicates sabotaging the people’s way of life.

“When we said ‘Zimbabwe is open for business’, we didn’t say it’s open to mischief or corruption. But there are people, a sizeable number of people in the economy who are mischievous and we are putting in place measures to stop them,” said President Mnangagwa.

President Mnangagwa said the business sector must also appreciate that the country was under illegal sanctions imposed by Britain and her allies and that some of the prevailing challenges were also being inflicted by unforeseen global geo-political dynamics such as the Russia-Ukraine war.

However, he was quick to say that the Second Republic advocates for local solutions by Zimbabweans for the prosperity of the country as opposed to crying foul over sanctions.

“After the coming in of Second Republic, we brought this new philosophy ‘Nyika inovakwa nevene vayo/Ilizwe lakhiwa ngabaninilo’. So, we just can’t sit there and cry.

“Even the Bible says the sweat of your brow you will eat your food until you return to the ground. So, we found it necessary to mobilise our people in order to eat,” said the President.

“Whatever we eat or produce, we must produce ourselves. If it’s the comfort we want, we must make it. With that philosophy we must say we must be patriotic. No one has a duty to develop, modernise and industrialise our country but ourselves.

“To do so, the Government is putting in place a conducive environment for business to thrive,” said President Mnangagwa.

He said overally, the economy was poised for growth as evidenced by the surge in income from the mining sector since the coming in of the Second Republic.

“The mining sector was US$2.8 billion annually and when we came in we started to support our people through modernisation aimed at reaching the set target of US$12 billion by 2023. Now we are at around US$6 billion and by the end of the year we will get to US$7 billion,” said President Mnangagwa. “We have three big mines in lithium and we are going to jump to US$12 billion by mid next year. Within four years we would have jumped from $2.8 billion to $12 billion and that’s a huge achievement we must celebrate.”

He said industry capacity utilisation was now at 68 percent up from about 30 percent, adding that shelf product content in shops now sits at 70 percent for domestic products up from around 40 percent.

Milestones are also being registered in energy production with additional 300MW, expected to be added from first phase of Hwange units 7 and 8 expansion and another 300MW early next year.

“All that is progress and it means that the measures we are putting in place are working. However, time is coming when we shall pronounce policy measures with regards to our own currency. Some will get into bed with their shoes on but it will be for the greater good of the economy,” said President Mnangagwa.

He said Government’s role is to support local talent in every sector, be it agriculture, mining or tourism.

“Our focus as a Government is not to suppress the talent in you. We want the Government to provide a conducive environment for people with talents in whatever fields to make money. Those who don’t have talents to make money can work for those who can make money.

“The Government is not there to do business but is there to facilitate for those who want to do business. My business is to open environment for you to open business and opportunities,” said President Mnangagwa.

Article Source: The Chronicle