Afreximbank allocates more than €72 million to the banking sector in Zimbabwe

Mar 26, 2014

The African Export-Import Bank (Afreximbank) has allocated a loan of $100 million (€72.4 million ) to the Zimbabwean banking sector on March 22nd in a bid to revive interbank lending and avoid a liquidity crisis.

The African Export-Import Bank (Afreximbank) has allocated a loan of $100 million (€72.4 million ) to the Zimbabwean banking sector on March 22nd in a bid to revive interbank lending and avoid a liquidity crisis.

"It is a well known fact that the Zimbabwean banking sector and more generally the economy are now facing serious liquidity problems," said the president of Afreximbank Jean-Louis Ekra, quoted by Ecofin news agency.

"This situation makes it difficult for many companies to access funding at affordable costs, especially SMEs," he added, indicating that the loan should help revive interbank lending.

Although
long-term deposits have more than doubled in 2012, banks are struggling to meet the growing demand from various sectors of the economy, according to a new report from research firm MMC Capital.

"Despite
a
marked
improvement in the long term component of deposits from
9.6
percent in December 2011 to 20.65 percent in December 2012, the capacity of banks to extend the much needed long term facilities to various sectors of the economy remains constrained as demand for credit outpaces supply," according to the research.

Bank deposits have been increasing since dollarisation in 2009, but most of it has been transitory in nature due to low disposable incomes, The Standard reports.

The short-term nature of deposits,
as well as high liquidity risks, would correspondingly lead to short-term lending, according to the report.ADNFCR-2976-ID-801706613-ADNFCR