Harare – Reserve Bank of Zimbabwe Governor, Dr John Mangudya has sensationally defended the Zimbabwe Asset Management Company (ZAMCO) saying without it the economy would have collapsed, a view different from the one shared by his counterpart in the finance ministry.
ZAMCO was established in 2014 with a 10 – year mandate to rid the banking sector of all non-performing loans (NPLs) after which the special purpose vehicle was anticipated to wound down its operations. It has since acquired debts amounting to over $1 billion from stressed companies with the potential to be rehabilitated upon the injection of fresh capital.
It mobilised Treasury Bills for banks to get liquidity and has been converting NPLs into performing loans via debt restructuring, among other strategies.
The highest NPLs level reached by the banking sector was 20.45 percent as at 30 September, 2014 before ZAMCO’s NPLs acquisition scheme which significantly brought down the figure to about 6.2 percent as at June, 2018. However, the figure has retraced northwards since ZAMCO wound up.
Appearing before Public Accounts Committee in Parliament today, Mangudya said that the central bank position is that ZAMCO has done well for this economy and has saved companies such as RioZim.
“We should always ask ourselves, what could have happened to Zimbabwe without ZAMCO. I can put it to you chairman and the members of parliament and senate that without ZAMCO this economy could have been collapsed,” said Mangudya.
Some companies that benefited from Zamco’s rescue scheme include The Cotton Company of Zimbabwe, RioZim, Star Africa, Cairns, Hwange Colliery Company of Zimbabwe, Border Timbers and CSC.
“Maybe one of your children is even employed by one of these companies. If these companies were not saved by ZAMCO, they would have collapsed,” said Mangudya.
Likewise, Zamco boss Cosmas Kanhai is on record saying Zimbabwe avoided a major bank lending catastrophe after over $1 billion worth of the toxic NPLs were shipped to the company.
However, Mangudya’s position greatly differs with the one shared by the Finance Minister, Mthuli Ncube who upon presentation of the 2019 National budget claimed that Zamco “has been toxic, it has been subsidising inefficiency in the market and it needs to be wound up.”
“Government has taken the position that there will be no further acquisitions of NPLs by the Zimbabwe Asset Management Company,” said Minister Ncube.
“With immediate effect, ZAMCO will no longer assume further loans from the market. In addition, Government will review ZAMCO’s mandate and consider winding up of its operations which are being supported by Government.”
Suspending acquisition of NPLs by ZAMCO is part of measures by the treasury chief to contain the country’s domestic debt which stands above US$9 billion. The high domestic debt is scuttling efforts to turn around the country’s fragile economy while choking the private sector from accessing local lines of capital.
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