Individuals are borrowing much more than key economic productive divisions thereby dominating the country's private sector credit list, a Reserve Bank of Zimbabwe (RBZ) latest monthly economic report has revealed.
According to the central bank's December 2018 report , credit to the private sector recorded an annual growth of 9.12 percent while the month-on-month, credit to the private sector grew by 1.72 percent, from $3 989.96 million in November 2018 to $4 058.65 million.
According to the report, private sector credit was distributed as follows: households, 26.33 percent; agriculture, 19.36 percent; services, 13.65 percent; distribution, 12.38 percent; manufacturing, 9.96 percent; financial organisations, and investments, 7.08 percent; mining, 4.46 percent; construction, 3.07 percent; and transport and communications, 2.23 percent.
"The current trends indicate that families have more collateral security as compared to the key economic productive sector players. For individuals to access credit they simply need to produce pay slips and continue to receive their salaries through the bank's account," said economist John Robertson in an assessment.
"Most businesses in the country are more informalised while those in the agriculture sector have been struggling to access lines of credit for almost 20 years now due to lack of title deeds for the land they are producing on and these factors push them away from credit worthiness."
Robertson added that there is urgent need to formalise businesses in the country as this will improve their chances to access credit lines that in turn will allow companies to produce internationally competent goods and services.
Credit to the private sector has been registering considerable growth following recent policy shifts which have seen government cutting private borrowing in a bid to create space for companies' access to finance.
The rates of lending interest rates passed by local banks have also been criticised for being too high and deterrent by a section of the country's economists.