By Alois Vinga
THE Finance Ministry on Monday slammed greedy businesses amid revelations that Zimbabwe is on the path to realise a record US$12 billion in export revenue by year end.
The remarks come shortly after recent investigations by the Reserve Bank of Zimbabwe (RBZ) exposed illicit dealings which resulted in the acquisition of multiple loans on a speculative basis which in turn led to the depreciation of exchange rates.
Speaking to the media, a rattled Finance Ministry’s permanent secretary, George Guvamatanga vowed to end continued arbitrage as he called on them to operate responsibly.
The former Barclays Bank CEO defended the high lending interest rates pegged at 200% arguing that they will not incapacitate companies from borrowing.
“I spent 20 years in the business of lending money and there is one very clear aspect that Non-Performing Loans (NPLs) are caused by bad lending and not by interest rates. We currently need a complete rethink and overhaul of the business model we are currently in Zimbabwe,” he said.
“We cannot have corporates in this country that continue to have business models that are based on monopoly pricing, unreasonable market power, access to cheap credit, access to cheap foreign currency, access to cheap power because they are always coming to Zimbabwe Electricity Supply Authority (ZESA) to access to cheap energy and fuel,” he said.
He said lately the government had seen some companies specialising in the canning of tomatoes wanting to get national project status because they also want access to lower taxes.
“So, the business model of most corporations here has been based on the mentioned fundamentals which we need a complete rethink on.
“This argument that the productive sector will not be able to borrow does not hold water. You should be able to sustain your business on correct borrowing and correct interest rates.
“Actually, the lack of confidence that we all write about on a daily basis is actually a reflection of the inability for us to create savings. So, we also now need to restore the value of savings because that is the only way we can create long term capital.”
Guvamatanga accused corporates of being subsidised by orphans, pensioners and widows through paying sub-economic interest rates which have in turn hurt the creation of capital and pensioners at the expense of creating savings in the economy.
He said such an argument needs to be taken off the table and pave the way for businesses that can sustain themselves in the economy on the basis of correct fundamentals.
The treasury secretary blamed the depreciating value of the local currency on non- economic fundamentals arguing that work has been done to rightly position the necessities.
He said for the period ending May 2022, a record inflow of exports revenues at US$4,9 billion was realised.
“This indicates that if we follow the same rate, we are on course to achieve a record US$12 billion of exports. You then ask now the justification for the exchange rate which we are seeing against such record exports.
“Therefore, there is actually no justification for the levels we are seeing the exchange rates depreciating to. When we look at those fundamentals, we argue that we are not in any currency crisis. We just need to address the behavioural issues which the Minister has indicated,” he added.
