Martin Kadzere Senior Business Reporter
LIQUIDITY challenges continue to be a threat to major national capital projects, recapitalisation of companies and investment in capital markets. The majority of listed companies have failed to recapitalise, replace ageing equipment and raise working capital, keeping capacity utilisation levels low.
Analysts this week said there is a need for both monetary and fiscal authorities to implement some of the measures required to facilitate the availability of cash on the market.
Central bank governor Dr Gideon Gono in his monetary policy statement in January this year said the RBZ was considering asset securitisation as a viable option to improve liquidity.
He said securitisation of Zimbabwe’s assets can be structured in such a way that financial resources can be mobilised for infrastructure development, investment, restructure national debt and alleviate liquidity challenges.
Funds raised from securitisation would also be used to transform maturity profiles of deposits from short- to medium- or long-term and pool resources that can be backed by domestic assets.
Securitisation of national assets includes mineral resources, structured through a special purpose vehicle, which is a legal entity created for the purpose of holding the assets sought to be transferred by the originator and the issuance of securities.
“In Zimbabwe, both residential and commercial real estate are mostly mortgage free, however, these are illiquid assets. There is, therefore, need to unlock the economic potential of these assets by securitising and transforming them into liquid assets through real estate-backed security,” said Dr Gono.
This, analysts said, should be implemented with speed to keep up with projected economic growth rates.
The economy is expected to grow by 9,4 percent this year driven by agriculture and mining.
However, these sectors have failed to access funding mainly mining that requires about US$4 billion to operate at optimum levels.
“The ideas are great and definitely will change the face of our market but it must be done with speed, because we need the money now,” said a local analyst.
According to Dr Gono, funds to purchase these equities can be obtained from offshore sources and backed by real estate in Zimbabwe.
Zimbabwe has got a low bank deposit base of about US$4 billion. In a bid to assist banks, Finance Minister Tendai Biti in his National Budget for 2012 further allocated US$100 million to the central bank as the lender of the last resort facility.
However, the ministry is yet to come up with the modalities of the US$100 million fund six months after the announcement of the Budget.
Treasury also said it would soon introduce Discounted and Tradable Paper against the central bank statutory reserve liabilities to banks willing to participate.
RBZ owes US$83 million to banks in statutory reserves, contributing to some of the prevailing liquidity challenges in the financial system.
All these initiatives are yet to take shape and the market is starving for cash.