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Members of Parliament has urged the Ministry of Finance to regulate bank charges and interest rates to cater for the poor, pensioners as well as people living with disabilities (PWD).
Speaking in parliament Wednesday, MP’s highlighted that it has become expensive to transfer and withdraw money from the banks and other money transfer agencies, they also said the interest rate of 200% is choking the business.
Legislator for Mabvuku Tafara James Chidhakwa questioned governments position on tax exemption for the poor and vulnerable people.
“I am directing my question to the Deputy Minister of Finance. It has become expensive to transfer and withdraw money from banks and other money transfer systems or agencies. What is Government policy position on tax exemption for the poor and vulnerable population such as pensioners and those living with disabilities?
Deputy Minister of Finance Clemence Chidawu acknowledged that the bank rates are very high and highlighted that the Ministry had already engaged with BAZ and banks and advised them to relook on their bank charges.
“ I think this is an issue that we have been talking about in this Parliament. The bank charges that are being levied by our financial institutions are very high. Even if we look at the performance of our banks, above 84% of their profits comes from bank charges and we have engaged the banks and BAZ, and the major reason that they have given us is that most of their solutions are imported.
“We have implored on BAZ to say let us try to ensure that the solutions that we use in Zimbabwe are local solutions. At the moment we cannot direct them to reduce the bank charges but what we are saying is collectively as BAZ, they need to re-look at their charges so that they are in-line with the market and they need to make sure that they are competitive and seek for local solutions, especially for the software they are importing.
Chidawu also added that they are looking forward to come up with moratorium for Pensioners.
“On pensioners, I think they are exempt from IMTT and on the bank charges; the issue that is being asked is whether we should come up with a moratorium. I think this is something that we can consider but at the moment we do not have such a policy,” he said.
Legislator for Harare East Tendai Biti also added that the 200% interest rate is not doing good to business.
“Bank charges are too high and the fact that even on his admission, banks are making profits from bank charges, seventy nine percent of bank profit is coming from bank charges when the business of banks is selling money and therefore making money from interests.
“Surely, the Ministry of Finance must regulate or cap bank charges. Equally, the interest rate of 200% is too high. Most people in this august House are farmers and business people. You cannot borrow money at 200%. The interest rate of 200% is choking business.
“The Government must lower the rates of interest to allow business to have oxygen. High interest rates of 200% are driving this economy into a recession because business is of borrowing.
“Can the Government cap bank charges? Can the Government lower the punitive rate of interest of 200% which is leading businesses to collapse because the oxygen of business is working capital derived and obtained from commercial banks?,” he said.
Chidawu highlighted that those borrowing for speculation are the ones the will use 200% interest rate but when it comes to production the will use 100% interest rate.
“In the case of production, what we have done as a Government is, for those who are borrowing for speculation we will apply the 200% interest rate but for those who are into production we are using 100%. So, I think this is in order and is basic economics.” said Chidawu.
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