Dr Mangudya fights for ZAMCO

Tawanda Musarurwa

The Reserve Bank of Zimbabwe (RBZ) is doggedly pushing for the Zimbabwe Asset Management Company (Zamco) — which was created to warehouse sourcing loans from the banking sector — to run until its term expires in 2025.

Zamco was established in 2015 with a 10-year mandate to mop up non-performing loans (NPLs) in the financial services sector. Treasury indicated in the 2019 Budget that Zamco would be disbanded soon as it would no longer be taking any new NPLs since Government had taken the decision to cut down on issuing additional securities to the market.

Treasury Bills(TBs) worth more than $1 billion were issued to help soak up the souring loans.

“Government has taken the position that there will be no further acquisitions of non-performing loans by the Zimbabwe Asset Management Company,” said Minister Ncube at the time.

However, RBZ Governor Dr John Mangudya told parliamentarians last week that the entity has “performed well” and is likely to see out its term.

“We had a meeting with the Minister (Prof Mthuli Ncube) and we advised him that the statement does not reflect our observation or knowledge about Zamco, and we take comfort that he understood,” said the central bank chief when he appeared before the Parliamentary Portfolio Committee on Public Accounts on Monday.

“Zamco acquired 1 160 NPLs from banks at a value $1,13 billion, and we think that ZAMCO has performed very well. So far $260 million has been repaid,” he added.

As a result of the statutory body’s interventions, NPLs had markedly dropped from 20 percent to 8 percent, which is marginally above the recommended average of 5 percent.

Zamco chief executive officer Dr Cosmas Kanhai also indicated last week that the body needed to run its full course.

“We hope that by 2025 we would have resolved all the acquired NPLs,” he said.

Notwithstanding the drop in NPLs, official figures show that credit risk in the banking sector increased last year.

This is reflected by the ratio of NPLs-to-total loans of 8,3 percent as at December 31 2018 from 7,1 percent as at December 31 2017.

“The increase in NPLs is largely a reflection of forward-looking credit risk management tools adopted by banks in line with the IFRS 9 accounting standards, resulting in improvement of the banks’ risks controls and provisions coverage,” reads part of the latest Monetary Policy Statement.

Meanwhile, the statistics show that lending to the country’s productive sector increased over the past year from 73,6 percent to 76 percent of total loans as at the end of last year.

Total loans in 2018 amounted to $4,2 billion compared to $3,7 billion in 2017.

The RBZ attributed the increase to lending to the agricultural sector, which increased from 14,7 percent to 16,4  percent, and State-owned enterprises from 12,1 percent to 20,1 percent.