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Zimbabwe Bank Deposits Up, But Analysts Say Sector Not Out of The Woods Yet

Deposits in Zimbabwe banks increased from $3.1 billion to $3.7 billion in the first quarter of the year, but some economists warn this is not a sign the banking sector is out of the woods yet.

Analysts say until the banks reduce their lending interest rates, currently between 15 and 40%, and provide medium to long term lending, investors will continue staying away.

Zimbabweans lost confidence in the banking sector a few years ago when it collapsed alongside the national economy, fueled by record inflation and unrestrained quasi-fiscal activities by the government.

Local and foreign depositors continue to shun the system fearing banks are not yet stable despite relative improvement since the formation of the unity government in 2009.

Some keep their finances at home. About $3 billion is believed to be circulating in the informal sector and never finding way into the banking system.

Economist Prosper Chitambara of the Labor and Economic Development Research Institute of Zimbabwe told VOA reporter Jonga Kandemiiri the revival of banks can only be measured when deposits start trickling in on long-term basis.