In a report titled, Zimbabwe Investment Outlook 2011 and Beyond, MMC Capital said liquidity challenges this year are set to prevail as companies look for more funding to financial expenditure at a time when there is inadequate money locally.
The report is likely to put a damper on companies’ efforts to look for long term funding to rebuild capacity and in some cases replace obsolete equipment.
“Going forward we expect the money market to remain short of long term funding and as a result interest rates will remain firm, ranging from 6% – 30% per annum with tenures remaining short term,” it said.
Banks are offering short term loans ranging up to six months and analysts say companies need loans with a minimum tenure of up to 12 months to be able to sustain themselves.
It said deposits into the banking sector are also expected to remain largely short term given that the lender of last resort (RBZ) has only been funded with US$7 million which is lower than the capital required for a single bank.
Although the central bank has been funded to the tune of US$7 million, banks are yet to access the money as there are no treasury bills which can be lodged as security.
MMC said although a few banks have reintroduced mortgage financing for up to 10 years with rates ranging from 6% to 12%, “these rates are expected to remain range-bound going forward”.