Zim’s NPLs drop to below 5pc

Zim Now Writer

Zimbabwe’s non-performing loans have dropped to below 5 percent from about 15 percent around 2015, the Reserve bank of Zimbabwe (RBZ) has said.

It was against this background the RBZ created the Zimbabwe Asset Management Company (ZAMCO) to help resolve the toxic loans in the banking sector, through acquiring these bad loans.

In 2015, the sector was faced with huge volumes of non-performing loans, some of which came with litigations for several firms that failed to service their short-term debts.

RBZ Governor Dr John Mangudya said ZAMCO succeeded in resolving bad loans, culminating in a safe and sound banking system, during its six-year tenure.

“Our financial system was in a precarious position owing to these bad loans and our intervention by creating ZAMCO was a masterstroke in terms of clearing the banking system of toxic loans. The organisation has since wound up operations and I can safely say that it has managed to resolve these bad loans and the banking sector is now in a safe and sound position,” Mangudya said.

During that six-year period, ZAMCO worked with firms that had a huge debt overhang, including the Cotton Company (COTTCO), whose revival has its genesis in ZAMCO.

COTTCO Head of Finance Jacqueline Dube confirmed the position: “We had short term loans which stood at around US$60 million and several banks had started the process of litigation to recoup their money. Fortunately, ZAMCO was formed and it helped us to repay our loans in a sustainable manner which lessened our financial burden. We are now on our strong footing and playing our strategic role of growing the cotton industry and uplifting the lives of over 400 00 farmers across the country,” she said.

Hwange Colliery, Rio Zim, Cairns and Turnall Holdings are some of the companies that benefitted from ZAMCO through rehabilitation of their debt, leading to eventual resuscitation.