LOCAL financial institutions continue to play a key role in driving the re-industrialization of the economy after increasing loans to productive sectors by 76 percent.
The latest banking sector report shows that financial institutions advanced a total of 230 billion Zimbabwe dollars last year, which is a 76 percent increase from the 2020 figure of about 144 billion Zimbabwe dollars.
The agricultural sector emerged as the biggest beneficiary, accounting for over 28 percent of the loans, followed by distribution, manufacturing, commerce, mining, housing mortgages, transport, and construction.
AFC Commercial Bank Head of Strategy, Mr Joseph Mverecha outlined how stability will be key in shaping up banking sector confidence.
“The trend has to continue but it is entirely on how the current policies can instil discipline and promote further growth,” said Joseph Mverecha, AFC Commercial Bank Head of Strategy.
Banc ABC Group Economist, James Wadi also explained key economic indicators in determining the sustainability of the economy.
“The exchange rate issue and tight inflation management policies will also be critical in ensuring that the growth trajectory is being sustained in all key sectors of this economy,” he said.
Banks recently revealed that the demand for loans is expected to continue improving in line with the incremental recovery of the economic activity from the COVID-19 pandemic.
Official data from the central bank also shows that total banking sector loans and advances increased by over 61 percent from over 140 billion Zimbabwe dollars to 230 billion Zimbabwe dollars as of December 31, 2021.
The trend was attributed by monetary authorities to the translation of foreign currency-denominated loans.
The data indicates that as of December 31 last year, foreign currency l denominated loans also constituted over 37 percent of the total banking sector loans, reflecting an increase of 30,16 percent.
However, market watchers warn that the high costs of borrowings need to be addressed to enable the low income earning sectors of the economy to also have access to the loans.