Lovemore Zigara Midlands Correspondent
THE World Bank (WB) has called upon the private sector in the country to rationalise salaries to facilitate economic recovery.
The global finance body also feels exorbitant interest rates charged by the banking sector should be reviewed as they contribute to economic stagnation.A World Bank delegation led by executive director Peter Larose was in the country last week to assess the economic situation.

The team said high interest rates increased the risk of companies’ inability to repay their debts.

“While the government is saying the private sector wage bill is high, there is need to also pay attention to the banks whose salary bills are also very high. Some of the banks have moved from their core business in terms of getting their income.

“Most of them have shifted and are getting their income from other activities which are running contrary to their business,” World Bank alternate executive in the African group’s directorate, Andrew Bvumbe said.

“They’re charging so much for the transaction costs and deposits so there’s a lot which needs to be addressed in the banking sector itself. The adjustment of salaries should be across the board.”

Interest rates charged by financial institutions in Zimbabwe range from 13 percent to 30 percent per annum depending on the type of loan.

The high interest rates have been blamed for the low participation in formal banking by the growing small to medium enterprises.

Estimates indicate that close to $5 billion is circulating outside the formal banking channels.

Meanwhile, the government has said it is working on streamlining its wage bill amid concerns that the bulk of the country’s revenue is gobbled by civil servants salaries leaving little room for capital expenditure.

The government has also capped salaries for top executives in public enterprises at $6,000 after unmasking a scandal in which the top brass in some entities awarded themselves up to $500,000 pay per month.

The World Bank team together with officials from the African Development Bank toured industries in Bulawayo, Harare and Gweru last week.

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