HARARE: The Zimbabwe Informal Sector Organisation (Ziso) has welcomed the reduction of interest rates on bank loans, but called for special treatment for mining, women’s initiatives, farming and manufacturing sectors.
In his Mid-Term Monetary Policy review statement, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said banks had agreed to interest rate guidelines that would see loans being given at a cost of between 6% and 18%. This will take effect from October 1.
This came on the background of concerns from borrowers that banks were charging usurious interest rates making the chances of defaults high.
Ziso said the move on interest rates was a progressive step towards facilitating access to credit for the small and medium enterprises. “This is important in view of the fact that the informal sector is now the major driver of the economy,” Ziso said.
“However, there is a need to consider a special interest rate for the informal sector, in particular mining and farming operations, manufacturing and women’s initiatives.
“It is hoped that access to credit will help to resuscitate local industry and increase local productivity and exports. Ziso believes that the informal sector has the potential to be transformed into major factories and industries if the government makes a deliberate effort of supporting its growth and formalisation.”
The organisation said the amendment of the Banking Act was also a positive step.
“It is also noteworthy that the central bank has delayed the promulgation of the Act to ensure widespread consultations with stakeholders. The new Banking Act must make it easy for informal traders to open and run bank accounts,” said the organisation.
“Zimstats revealed that the majority of players in the informal sector operated without formal bank accounts. This was attributed to lack of knowledge and illiteracy about banking and limited and erratic incomes.”
The organisation said the Banking Act should take into account the need to tailor-made banking facilities to accommodate and create incentives for the informal traders to utilise formal banking channels.
The organisation urged the central bank to consider allocating a percentage of the $210 million external loan towards supporting informal sector enterprises to stimulate growth and formalisation.
“Ziso implores the Reserve Bank of Zimbabwe to look seriously into the potential of the informal sector and devise strategies to support its potential to help transform the country’s economic fortunes and ease acute levels of unemployment,” it said.
