BANKING SECTOR
Banking sector performance remains satisfactory, as reflected by adequate capitalisation, strong asset quality, adequate liquidity and sustained profitability, among other key financial soundness metrics. As at 30 June 2023, the banking sector was adequately capitalized and all banking institutions were in compliance with the prescribed tier 1 and minimum capital adequacy ratios of 8% and 12%, respectively. The average capital adequacy and tier 1 ratios were 40.48% and 35.35%, respectively. Aggregate core capital increased from $611.11 billion as of 31 December 2022 to $5.05 trillion as of 30 June 2023.
The growth in core capital was mainly attributed to the capitalization of retained earnings. The retained earnings for some banking institutions are largely composed of revaluation gains from investment properties and translation gains from foreign exchange-denominated assets. As of 30 June 2023, fifteen (15) out of 18 banking institutions (excluding POSB) reported core capital levels that were above the minimum capital requirements. The prescribed minimum capital requirement is ZW$ equivalent to US$30 million for Tier I banking institutions and US$20 million for Tier II banking institutions including building societies.
Banking institutions are employing a number of capital preservation strategies, which include investing in gold coins and investment properties, lending in US$, as well as maintaining a portion of their capital in US$. Total banking sector assets increased from $3.81 trillion as at 31 December 2022 to $27.28 trillion as at 30 June 2023. Aggregate banking sector loans and advances increased by 7.9 times from $1.29 trillion as at 31 December 2022 to $10.19 trillion as at 30 June 2023. The increase was largely attributed to an increase in foreign currency-denominated loans, which constituted 94% of the sector’s loan book.
MICROFINANCE SECTOR
Microfinance is increasingly considered a key instrument in the implementation of effective and sustainable strategies aimed at poverty alleviation and inclusive economic development. The microfinance sector in Zimbabwe continues to contribute towards the attainment of Zimbabwe’s 2030 Vision of ‘an Upper Middle-Income Society by 2030’ through the provision of essential financial services to low-income and marginalized communities and their micro and small enterprises. The microfinance sector registered a 596.83% increase in aggregated equity from $35.91 billion as of 31 December 2022 to $250.23 billion as of 30 June 2023.
The increase was attributed to organic growth and fresh capital injection by some microfinance institutions. As of 30 June 2023, the aggregate core capital for the DTMFI sub-sector was $131.32 billion, a significant increase from $29.49 billion as of 31 December 2022. Total loans for the microfinance sector increased by 672.66% from ZW$46.01 billion as at 31 December 2022, to ZW$355.50 billion as of 30 June 2023. The sector registered an improvement in the loan portfolio quality as evidenced by a decrease in the portfolio-at-risk (>30 days) ratio from 10.95% to 9.48% over the same period.
MINING SECTOR
Mineral exports, which account for the largest share of merchandise exports, declined by 12.5%, from US$2 898.9 million in the first half of 2022 to US$2 5836.8 million, during the period under review. The decline in exports followed the continued softening of key commodity prices largely on account of faltering global growth prospects.
AGRICULTURAL SECTOR
The country’s agricultural exports increased by 15.9%, from US$399.9 million in the first half of 2022 to US$463.5 million in 2023, during the period under review, driven by tobacco exports. Horticultural exports were, however, subdued owing to lagged effects of higher input costs for fertilizer, chemicals, fuel, packaging, and labor, which increased significantly in 2022.
MANUFACTURING SECTOR
The manufacturing sector`s capital utilization went down by 3.2% in the first quarter of 2023 on the back of the incessant power cuts among other factors. First quarter capacity utilization for large manufacturing companies was 51.1%, a decline from the fourth quarter value of 57.9% as of 2022. For SMEs in the sector, capacity utilization for the first quarter of 2023 was 44.5% from 48.8% recorded in the fourth quarter of 2022. The Manufacturing sector confidence index went up from 2.9 in the fourth quarter of 2022 to 7,3 in the first quarter of 2023.
