Distribution Sector Gets US$169m in Loans

THE distribution sector in Zimbabwe received US$168,7 million or 27,23% of the loans advanced by commercial banks during the second quarter of the year, figures obtained from the Reserve Bank revealed this week.

The distribution sector is involved trading, retailing, wholesaling and logistics.
In April the sector received US$34,4 million from the country’s 14 commercial banks. In May the loans amounted to US$46,2 million before increasing to US$83,1 million in June.
“Of the total banking sector loans and advances of US$263,49 million as at June 30 2009. The distribution sector had the largest allocation of US$83,15 million (27,2%) followed by agriculture with US$72,39 (24,09%) and manufacturing with US$52,89 (18,09%),” the Reserve Bank said.
Agriculture which used to be the major foreign currency earner received US$148,3 in Q2 or 24,08%.
Agriculture, has strong linkages to the rest of the sectors, contracted by an annual average of -7,1% between 2000 and 2008. Cumulatively, agricultural output contracted by -79,4% during 2002 – 2008.
The manufacturing sector borrowed a total of US$111 million or 18,09% during the same month.
Analysts yesterday the sector seem to be channeling the loans for the correct use as evidence by the improvements it is showing.
The sector suffered from skills flight, power outages, and erratic supply of fuel as the economy sank deeper into recession last year.
As a result of the above issues, capacity utilisation gradually declined, reaching 35,8% in 2005, 33,8% in 2006, 18,9% in 2007, and dropping sharply to between 4-10% by the end of 2008.
Output contracted by 18% in 2006, 21,1% in 2007 and an estimated 29,76% in 2008. Following the liberalisation measures introduced at the beginning of 2009, confidence has started building up, critical for the normalisation of day to day operations.
As a result, capacity utilisation in some industries has increased rapidly to between 25-50% in the first half of 2009 and businesses are generally optimistic that this will significantly improve further by end of the year.
The mining sector which had put on hold long term plans due to the “investor unfriendly” mining bill received loans amounting to US$54,1 million during the three months.
Mining accounts for about 4% of the GDP and 16% of total annual foreign currency to the country. Due to mining closures, foreign currency shortages and uncertainty regarding the mining bill, mining output is expected to record a decline of -11,2% this year.
Financial firms received US$43 million during the three months or 7% of the total loans advanced.
The service industry which has not improved since the dollarisation of the economy accounted for 6,75% or US$41,5 of the loans.
Individuals received loans amounting to US$15 million during the three months while the communication sectors whose service is not as efficient when compared to the region received US$10,7 million.
The construction industry had the least loans approved which amounted to US$$4,8 million.