President Emmerson Dambudzo Mnangagwa could have scored an own goal by suspending banks’ lending role one of the country’s leading Banks has warned.
President Mnangagwa recently banned the bank’s lending role which is the core business, but analysts say the move could backfire.
BancABC says Mnangagwa’s move could cut financial sector’s income by half, leading to the collapse of banks, with devastating effect for the whole economy.
In an analysis of the measure, BancABC maintains that lending is the core function of all banks that many of them cannot do without.
“”Banning lending activities will threaten survival of banks as this will wipe out 20-50% of their incomes,” says BancABC.
The bank added that President Mnangagwa’s decree will deprive companies of capital, and could force banks to survive through unofficial means.
Apparently, President Mnangagwa’s move was supposedly aimed at arrest the Zimdollar’s continued free-fall.
However, renowned economist Steve Hanke is on record saying Zimbabwe should abandon the local currency and dollarise.
In his recent update, Hanke said:
“In this week’s inflation table, Zimbabwe takes the 1st prize. On April 28, I measured Zimbabwe’s inflation at 207%/yr.
“More than 3x the official inflation rate of 61%/yr. It’s time for Zimbabwe to dump the Zimbabwean Dollar & officially adopt the USD.”