BY TATIRA ZWINOIRA Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has called on banks to conduct regular corporate governance and compliance risk self-assessments to keep the financial sector sound.
A report by the International Monetary Fund (IMF) early this month gave a gloomy view of Zimbabwe’s financial sector.
The IMF said banks were bleeding, with individual players’ balance sheets shrinking in real terms due to rising inflation.
Despite government’s attempts to calm the jitters over the economic landscape, the data shows the wheels could be coming off.
The IMF’s report came after the central bank had noted that the financial sector remained stable enough to support economic recovery.
Speaking at the Institute of Corporate Directors Zimbabwe’s 2022 Corporate Governance Colloquium’ last Thursday, Mangudya said banks were expected to have an internal policy on fitness and probity in light of the financial instability in the market.
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“The emerging corporate governance environment is charaterised by a number of factors that challenges the traditional models of governance that have guided many boards until now,” Mangudya said.
“An increasingly complex set of pressures, intensified stakeholder demands, increased expectations of environmental and social issues require sound corporate governance practices.
“In order to ensure on-going and contemporary assessments of fitness and probity, the bank expects all regulated entities to have an internal policy on fitness and probity.
“The bank also expects every banking institution and its controlling company to conduct regular corporate governance and compliance risk self-assessment.”
The RBZ chief said this was part of the central bank’s quest to foster corporate governance for the protection of the public interest.
According to the RBZ, due to the financial stability of the financial sector there has been an increase in domestic credit resulting in the availability of locally made products in retail stores.
In the central bank’s January 2022 monthly economic review, total loans and advances were $198,28 billion distributed to several sectors of the economy.
Of this amount, the agriculture sector received loans and advances worth $58,16 billion.
He said the construction sector was advanced $2,18 billion, while the communication sector received $576,43 million.
The RBZ also noted that the distribution sector received $26,57 billion, while the financial and investments sector was advanced $366,23 million during the period.
The data noted that financial sector organisations were loaned $8,88 billion during the review period.
It said the manufacturing received $23,07 billion in loans and advances, mining ($11,84 billion), services ($15,74 billion), transport ($3,51 billion), individuals ($47,32 billion), and conglomerates ($29,56 million).
Total bank deposits $425, 31 billion, by the end of the same period.
“Increased domestic output will insulate the economy from global exogenous shocks such as Russia -Ukraine, which has resulted in significant increase in global food prices,” Mangudya said.
“Global il and food prices through to domestic inflation has been significant since February 2022, leading to the country missing its intial inflation target.”