Zim sees cost of capital decrease
ZIMBABWE has seen a marginal decline in the cost of capital a few weeks after President Emmerson Mnangagwa came into office, latest statistics show.
An analysis of banking sector lending to individuals and corporates as presented in the Reserve Bank of Zimbabwe’s weekly economic highlights for the period between January and December 2017 shows that commercial banks interest rates to corporates that peaked at 7,18 percent in the third week of October compared to an annual low of 6,47 percent in the second week of January, have been slowing down since mid-November in apparent show of confidence in the new administration.
The weighted average lending rates for commercial banks opened 2017 at 6,73 percent in the first week of January before hitting the lowest so far in the year at 6,47 percent the following week.
The lending rates remained under 7 percent until the end of March before breaching the mark to breach 7,02 percent final week of March.
The rates remained above 7 percent for almost 20 successive weeks before dropping to 6,96 percent in the third week of August.
Five weeks later, the final week of September, the rates went up to 7,01 percent before retreating to 6,99 percent in the first week of October.
In the second week of October, the rates went over 7 percent peaking at 7,18 percent in the third week of the month.
The week ending November 10 saw interest rates reaching 7,09 percent up from 7,05 percent the previous week. The Zimbabwe Defence Forces (ZDF) on November 15 moved in to weed out of Zanu-PF criminal elements surrounding former President Mugabe.
On the week ending November 17, after the military had stepped in, the lending rates dropped marginally to 7,06 percent the following week.
The process was to later result in President Mugabe’s retirement on November 21 and the return of then deposed and exiled former vice President Mnangagwa.
After President Mnangagwa’s return, the week ending November 24 witnessed another decline in interest rates for corporates to 7,03 percent. This was also the day of his inauguration.
A week later, being the first week of December, yet another marginal drop in the lending rates to corporates was seen to close the week at 7,01 percent.
President Mnangagwa took the reins of his party and Government and has been on a frantic to restore confidence in the economy by restructuring it.
Efforts to cut recurrent expenditure have been made in the 2018 National Budget.
President Mnangagwa’s speech last week at the Zanu PF extraordinary congress is also a source of renewed hope.
In his State of the nation address yesterday, President Mnangagwa emphasized the need to fight corruption and grow the economy across all sectors.
Lending rates to individuals that started the year at about 10,68 percent have also been dropping to reach 9,64 percent in the first week of December.