By Owen Mandovha
THE Zimbabwe Asset Management Company (ZAMCO), which was created by the Reserve Bank of Zimbabwe to resolve toxic loans in the banking sector, has wound up operations after successfully completing its mandate.
In 2015, the banking sector was facing a chaotic ending on the back of huge volumes of non-performing loans which came with litigations for a number of companies that failed to service their short-term debts.
Governor of the Reserve Bank of Zimbabwe, Dr John Mangudya made a timely intervention by creating the Zimbabwe Asset Management Company (ZAMCO) to acquire these bad loans.
During its six-year tenure, ZAMCO succeeded in resolving bad loans culminating in a safe and sound banking system.
“Our financial system was in a precarious position owing to these bad loans and our intervention by creating ZAMCO was a masterstroke in terms of clearing the banking system of toxic loans. The organisation has since wound up operations and I can safely say that it has managed to resolve these bad loans and the banking sector is now in a safe and sound position,” he said.
ZAMCO also worked with companies with a huge debt overhang including COTTCO which owes its revival to the creation of ZAMCO.
“We had short term loans which stood at around US$60 million and several banks had started the process of litigation to recoup their money. Fortunately, ZAMCO was formed and it helped us to repay our loans in a sustainable manner which lessened our financial burden. We are now on our strong footing and playing our strategic role of growing the cotton industry and uplifting the lives of over 400 00 farmers across the country,” said COTTCO Head of Finance, Mrs Jacqueline Dube.
Non-performing loans stood at a whopping 15 per cent prior to the establishment of ZAMCO and are now at a recommended threshold of less than five per cent.
Some of the companies whose debt was rehabilitated and now resuscitated include Hwange Colliery, Rio Zim, Cairns and Turnall Holdings.