Pay up your loans: Mujuru

HARARE - Zimbabweans must pay back their loans to facilitate viability of the banking sector, Vice president Joice Mujuru has said.

The Zanu PF number two not only echoed President Robert Mugabe’s calls for bankers not to abuse depositors’ funds, but expressed concern over the rising default rate on loans in the country.

“We need people to keep money in banks and a public that honours its obligation to the banks. Hatidi nyika inevanhu vasingabhadhare zvikwereti (We do not want a country of people who do not pay back loans),” said Mujuru at CBZ Bank Limited’s 32nd anniversary on Wednesday.

However, analysts say the interest charged on loans by the banks were deterrent.

Before Finance minister Tendai Biti announced key reforms in the banking sector in his 2013 national budget, financial institutions were charging interest rates between 15 and 30 percent.

Biti barred banks from levying charges on deposits of $800 and below while he also ordered the institutions to pay a minimum four percent per annum interest on deposits of $1 000 and more held for at least 30 days.

He also imposed a 10 percent cap on loan interest.

However, market players and analysts said the reforms are detrimental to the fragile and sensitive sector.
Mujuru reiterated the need for banks to desist from gambling with depositors’ funds describing it as a “clear case of fraud”.

“We do not want banks that gamble with people’s monies. It is pure corruption,” she said.

Recently, Mugabe took a swipe at the banking sector, accusing bankers of gambling with depositors’ funds and threatened that culprits should be jailed.

Mugabe said the “illicit” bankers violated depositors’ trust, a scenario that contributed to the current state of the economy and defeated the purpose of indigenisation.

“Bankers who gamble with depositor’s money deserve to go to jail,” he said.

“Hautambe njuga nemari isiri yako ukadyiwa njuga yacho woita sei?

Wotoendesa mukadzi ka sepinyoro (You don’t gamble with money that is not yours, what will happen if you lose the bet? You will end up pawning your wife). Such behaviour is unacceptable,” Mugabe said at the Economic Empowerment Conference held in Harare last week.

The veteran leader said the thrust to indigenise must be guided by dependability, adding that locals must not grab companies from foreigners and “then fail to fill in the shoes of the foreigners.”

“We have the capacity to start our own businesses, good business ethics are the foundation of any business practice. Indigenisation is not an excuse for poor business ethics,” Mugabe said.

One of the key contributors to Zimbabwe’s banking crisis has been owner-management, which resulted in corporate governance weaknesses such as insider lending, abuse of depositors’ funds and speculative activities.

At the height of the banking crisis around 2003, in just six months, 13 out of 25 financial institutions were placed under curatorship, liquidated or administered by the Reserve Bank of Zimbabwe through the Troubled Banks Fund.

Most Zimbabweans lost confidence in banks when their life time Zim-dollar savings were wiped out at the inception of the multiple currency system in 2009. - Wendy Muperi

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