John Mangudya, the chief executive officer of the Commercial Bank of Zimbabwe (CBZ) Holdings, says due to the perceived high country risk, there has been a decline in international private capital inflows and lines of credit have been availed with stringent disbursement conditions.
“In addition, Zimbabwe companies doing business in international markets are required to make upfront cash payments. It is against this background that we (CBZ) have managed to secure long term funding from international investors to finance infrastructure rehabilitation and related industries through the issuance of the US$50 million three year Zimbabwe Economic Recovery Bond,” said Mangudya.
The Bond received overwhelming response from the investing public, both local and international and was successfully listed on the Cayman Stock Exchange to allow increased foreign participation.
The CBZ boss said efforts were underway to finalise listing the Bond on the Zimbabwe Stock Exchange (ZSE).
“We will continue to navigate the waters looking for more financial solutions for the manufacturing sector and the economy at large,” he added.
Mangudya revealed that since the introduction of the multiple currency regime in February 2009, the economy has continued to attract short-term deposits from the banking public and this has constrained the banking sector from lending long-term.
“Thus, while deposits have been on the rise in the banking sector, from around US$400 million in March 2009 to about US$3 billion as at the end of the first half of 2011, a substantial portion of these deposits are of a short term nature whilst the economy is in dire need of medium to long term funding.
“It is also imperative to note that a significant amount of cash is estimated to be circulating outside the formal banking sector,” he said.
Despite the challenges, Mangudya said the banking sector remained confident that the economy will grow by at least 7, 5 percent.