Eric Chiriga/Chris Goko
ZIMBABWEAN building societies’ desire to access productive sector facility (PSF) funds for onward lending to the property sector has been frustrated by the Reserve Bank which is
reportedly reluctant to release money, it has been learnt.
Miccah Moyo, the immediate past chairman of the Association of Building Societies (ABS), said Beverley Building Society had inquired about cheaper PSF funds, but responses to date indicate the monetary authorities were less than enthusiastic on the arrangement.
“The society (Beverley) would have liked to access the productive sector funds for purposes of infrastructure development,” Moyo said recently.
“The engagement has been between the Association of Building Societies (ABS) and the Reserve Bank of Zimbabwe (RBZ),” Moyo said, adding: “Responses to date indicate societies are unlikely to be considered for this facility.”
The rationale of seeking funds under the PSF is that it would lower the cost of housing and property development because it offers lower-than-market interest rates.
Repayment rates under the special financing facility — directly administered by Zimbabwe’s central bank — are capped at no more than 50%, while market rates hover around 130%.
Beverley, which is part of a small band of Zimbabwean mortgage lenders, is deeply concerned about the non-interest-earning statutory reserve subscriptions, which also make up the PSF pool.
Under new capital adequacy laws and guidelines, building societies pay $7,5 billion in sitting funds and this has caused discomfort among mortgage lenders leading to bigger players like Central African Building Society (Cabs) circumventing capitalisation payments by lending more money.
It has since emerged that Beverley issued loans worth $10 billion in the last three months of 2004, meaning it could have taken a cue from number one lender Cabs.
The inventive arrangement which Moyo is seeking would be discontinued once mortgage beneficiaries secure other long-term financing facilities.
“This short-term (PSF) financing would be liquidated once beneficiaries have secured long-term mortgage finance for both the acquisition of stands and superstructure,” Moyo said.
Observers said by denying building societies access to the PSF, the RBZ was confirming a long-held view that disbursements under the facility were narrow, yet infrastructural development was key to economic development.
Meanwhile, Zimbabwe Building Society’s Bernard Musuwo is ABS’s new chairman. He was elected to the post late last year.