By Kuda Chideme, HARARE, November 20 (The Source) – Zimbabwean banks have continued to lower interest rates to stimulate borrowing in the country’s deflationary economy, latest figures from the central bank have shown.
Interest rates charged by commercial banks for individuals have fallen 3.18 percentage points from the beginning of the year to 10.98 percent as of November.
Weighted commercial banks’ interest rates for commercial clients have also gone down from 9.66 percent in January to 7.27 percent in November.
Economic analyst James Wadi told The Source that in addition to complying with the central bank’s directive to cut lending rates, banks were also revising their rates to be competitive.
In August the central bank announced a new interest rate framework with lending to productive sectors attracting rates ranging between six percent to 18 percent per annum, depending on the borrower’s risk profile.
“As a country we already have a perceived political risk which makes the banks’ lines of credit pricey and it is difficult in this deflationary environment to sustain such rates considering that most businesses have taken cuts in margins,” said Wadi.
“In US dollar terms, 10 percent is still quite high if we are to compare with our peers in the region. I believe as stability returns to the banking sector, there is still room for the rates to fall even further to single digits,” he said.