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Tuesday, February 7, 2023
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Business Push For Interest Rate Cut

Local businesses are being urged to practice sound cash flow management techniques to avoid borrowing at current interest rates of 200 percent, amid ongoing efforts to push for interest rates cut to sustainable levels.

According to Zimbabwe National Chamber of Commerce (ZNCC) president Mike Kamungeremu at the ZNCC Women in Enterprise Conference, the 200 percent rate is no longer in harmony with the current stability in exchange rates.

“I am aware of the current liquidity crunch in the economy and I urge you to practice sound cash flow management techniques. Those that had borrowed and are highly geared should immediately consider repaying those loans. 200% with the current stability will kill businesses,”

“I would also wish to appeal to the Reserve bank of Zimbabwe to reconsider their stance and reduce interest rates specifically for those that had borrowed already before the 200% was introduced.”

Several companies have raise the red flag over the high cost of borrowing.

Retail giant, OK Zimbabwe recently stated that the excessive rates have created liquidity pressure across its supply chain and was also engaging authorities on the matter.

The interest rate hike from 80 percent to 200 percent was put in place by the Central Bank as a means to curb borrowing for speculative purposes which was fueling the exchange rate movement at the time.

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However, a tradeoff was inevitable, as this meant sacrificing genuine business players from accessing cheap capital.

Authorities have repeatedly stated that interest rates will only be cut at a time when the Bank is confident of a sustainable stability in the exchange market.

The 2022 Women in Enterprise Conference and Awards running under the theme: “Igniting Innovative Business Resilience in Challenging Times”.

Kamungeremu told women in business to invest in energy such that businesses will not be adversely affected by ongoing power cuts.

“I am also mindful of the current power challenges which are affecting business. We have been told that Hwange 7 and 8 plants are now nearing commissioning. We applaud that but my appeal to you as business people is for you to invest in power backup solutions and generate your own power and have Service Level Agreements for your critical sites. This will guarantee business continuing and survive and ensure that we support vision 2030.”

Women constitute 52 percent of Zimbabwe’s population but own very few established businesses.

“Women-owned businesses’ absence from main business member organizations is a cause for concern and as the Chamber’s leadership, we will reach out to you in the near future to find ways on how we can collaborate and elevate ourselves together,” said Kamungeremu.

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