Zimbabwe: AfDB urges banks to lend to manufacturing sector
Four manufacturing firms intend to invest about $27 million (€24 million) in their production processes.Zimbabwe should implement policies that ensure access to credit to support the performance of the manufacturing sector that has recently been showing signs of improvement, the African Development Bank (AfDB) has said.
"Four manufacturing firms intend to invest about $27 million (€24 million) in their production processes. Policies that ensure access to credit and improve the general investment climate could complement such efforts," it said in a note.
It said this would help Zimbabwe, which continues to operate under a difficult economic environment, even though there were some positive developments during the month of February 2015.
The announcement comes as fresh data revealed that Zimbabwe's banking sector is experiencing sluggish growth, hampered by liquidity shortages and a lack of investment.
Total banking sector deposits grew by eight per cent to $5.1 billion during the year to December 2014, according to a report by MMC Capital seen by the Financial Gazette.
By the end of 2014, banking sector non-performing loans accounted for 15,91 per cent of all loans, down from 20,45 per cent recorded in September 2014.
Total assets grew by 7,1 per cent and the loans to deposit ratio also weakened to 72 per cent in 2014, from 73 per cent in 2013, reflecting the reduced lending appetite of banks in an attempt to mitigate the effects of credit risk.