According to the information published by the Financial Gazette, a local media based in Zimbabwe which quoted John Mangudya, the Governor of the Central Bank of Zimbabwe, The Zimbabwean government is in talks with multilateral funding agency Afrexim Bank to provide to the country, funds to enable it to restore stability in the banking system.
The amount requested was not disclosed, but the money collected will permit to buy guaranteed doubtful debts, or those that are likely of an effective recovery and that prevent today the ability of banks to finance the economy of Zimbabwe. The problem concerns the government of this country, which in order to solve it, has created in 2014 a specialized structure, Zimbabwe Asset Management Corporation, the Nigerian model of AMCON, and in August 2014, has absorbed nearly 45 million dollars of doubtful debt from the banks.
However, the government’s intervention may not be easy. In some cases doubtful debts arose from the fact that many banks granted loans to employees, relying on the fact that they were collecting their salaries and could pay the agreed terms. But in a context marked by low liquidity in the country, this recovery has become more difficult, sometimes leading to forced sales of real estate.
In other cases, the situation is the result of a problem of governance in some banks that have provided loans to shareholders or close to them, sometimes without real guarantees. In any case, many of them will not be around to benefit the government’s help. On Friday 9th January, the Central Bank conducted the withdrawal of approval for Allied Bank, ending its licence to practice in the sector.