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Banks Freeze New Loan Applications Over Policy Concerns

Most Zimbabwean banks have reportedly stopped making new loans because of concern over policies President Robert Mugabe will pursue after he won an election described by his main rival, Morgan Tsvangirai of the Movement for Democratic Change, as a big farce.

The banks are concerned that President Mugabe, Zimbabwe’s first black ruler since independence in 1980, may press ahead with plans to force foreign-owned companies to cede 51 percent stakes to black Zimbabweans or the government.

Zimbabwean banker Samson Nhliziyo told VOA Studio 7 that most banks are skeptical about the current political situation “and as a result feel that they cannot process fresh loan applications.”

“Most foreign-owned banks have completely stopped processing new loans while some indigenous banks that support the incoming government’s black economic empowerment program are conducting business as usual,” said Nhliziyo.

Several other bankers said most foreign-owned banks have been gripped by fear as the political situation remains uncertain following general elections which have been dismissed as a big farce by Mr. Tsvangirai, Britain, United States, Australia, the European Union and Botswana.

Others said some banks are not processing fresh loans due to internal financial challenges. “We do not have the money for giving individuals and companies loans. In some cases, it’s not about the just-ended general election but liquidity issues,” said another banker linked to the Reserve Bank of Zimbabwe, who declined to be identified.

And the Zimbabwe Stock Exchange’s industrial index continues to fall due to political uncertainty. The index fell from 231.21 to 205.6 points following the announcement of the election results.

Economist Prosper Chitambara of the Labour, Economic Development and Research Institute of Zimbabwe said the new government should take an inclusive approach to the country’s looming economic crisis.
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