19 January 2018
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$100m facility could help ease cash shortages
20/12/2013 00:00:00
by Business Reporter I Agencies
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ZIMBABWE has secured $100 million from African Export-Import Bank to underpin interbank lending and boost confidence in the financial system amid a liquidity crisis, said Finance Minister Patrick Chinamasa.

“I propose to introduce a $100 million interbank program with effect from Jan. 1,” Chinamasa said in his budget presentation on Thursday. “This is necessary to restore confidence in the local financial sector.”

Eddie Cross, a top opposition MDC-T official, said this was an important development for the banking sector.

“(Chinamasa’s) move on the banking sector has been extremely important,” he said.

“Our immediate crisis is in the banking sector, we have six banks that are technically insolvent and another three banks which are in serious trouble, some of them big banks. His moves will stabilise the banking sector and restore some confidence.

“Budget to interbank market and RBZ – It’s not enough but it’s a big step forward. It’s the most he could do, he is not fleshed with money. What he has done is very important.”

Some analysts however said the $100 million may not be enough.

“The $100m interbank facility is welcome but may not be enough and can be absorbed quickly in the tight liquidity situation,” said Ritesh Anand of Invictus Capital.

“ It’s a positive step but the question is always how far can that go. About the government assuming the RBZ debt, what does that actually mean, are the companies owed better or worse off because they are just moving from one line to the next.”

Zimbabwe’s Allied Bank Ltd. and Metropolitan Bank have seen lines form outside their branches in Harare this week as customers try to withdraw cash amid a shortage of liquidity. A manager at Allied Bank was assaulted on December 16 by angry customers who smashed the glass doors of a branch.

The liquidity crunch partly results from the central bank not taking on the role of “lender of last resort,” Sij Biyam, chief executive officer of the Bankers Association of Zimbabwe, said.

The country’s central bank said in March that two or three banks were struggling to raise funds to meet part of a $100 million capitalization.

“People are not banking their money,” Chinamasa said. “They are keeping it under their mattresses.”

Farai Mpofu, a spokeswoman at Metropolitan Bank, wasn’t immediately available for comment. Allied Bank, which was bought last year by Transport Minister Obert Mpofu, plans to issue a statement later today.


Afreximbank, which has capital of $5 billion, has its headquarters in Cairo and a branch in Harare, according to its website. The shareholders of the trade finance bank include African governments and central banks.

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