Africa-Press – Zimbabwe. THE Reserve Bank of Zimbabwe (RBZ)’s regulatory policies in relation to interest is driving the country’s persistently high lending rates rather than bad commercial banking practices, experts have warned.
Industry leaders revealed this during the ongoing fourth edition of the In Conversation with Trevor Ideas Festival running under the theme The Future of Human Capital, Innovation and Ethics in the Age of AI, in Nyanga.
The convener of the festival is Alpha Media Holdings (AMH) owner and chairman, Trevor Ncube.
AMH are the publishers of NewsDay, Zimbabwe Independent and The Standard, and also own online broadcaster Heart & Soul TV.
The experts highlighted the complex interplay between regulatory policy and banking operations, showing that reducing interest rates requires co-ordinated action across Zimbabwe’s financial ecosystem.
The discussion came at a time when RBZ is holding its benchmark policy rate at 35%, a level that reflects a restrictive monetary stance and has been red flagged by the market as too excessive.
Responding to questions on how his bank determines interest rates, TN CyberTech Investments Holdings Limited chief executive officer Tawanda Nyambirai said the statutory reserve requirement was a major contributor.
“When you deposit some money, there’s a percentage of the money that is required to sit in the Reserve Bank as non‐interest bearing money,” Nyambirai said.
“So, from your money that you deposit with us, we don’t sit with all the money.
“We take a percentage and at the moment, the percentage is, I think, about 35% of the money that is taken and sits in an account at the Reserve Bank with zero interest. So, we only have access to 65% of your money.”
He also highlighted RBZ’s rule of converting surplus bank balances to non‐negotiable, non‐interest‐bearing instruments held for 30 days.
“At times, you accumulate balances because you want to meet obligations, but the Reserve Bank can take all those balances you have accumulated and give your paper that is useless, that you will be required to hold for 30 days,” Nyambirai said.
“With that macro‐economic environment, how can you reduce interest rates?”
He said while regulators justified their actions as inflation‐control tools, they “contribute to the high interest rates that we have”.
He explained that lowering rates requires extensive lobbying and co-operation with regulators.
Nicholas Vingirai, a banker and entrepreneur, echoed similar concerns and pointed to the RBZ regulatory design itself.
“Regulating banks is not really hinged on what they are saying, because you can regulate the balance sheet of banks in a way that actually fuels the problem that they are talking about,” he said.
“As a regulator, you can help to define the balance sheet of the banks in a way that benefits industry.”
Vingirai emphasised that by adjusting how liquid and non‐liquid assets are treated, inflationary pressures driving high interest rates can be eased.
“It can actually help interest rates to go down,” he said.
“We have so much brain power here.
“We could solve the nation’s problem right here before going away from Nyanga.”
He said RBZ, the banks, corporates and individuals had a role to play.
“And until we, as stakeholders, identify our roles and are able to face them with an intent to resolve these issues, we’re going to be around here chasing our tails,” Vingirai said.
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