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Working Paper

IDS working papers;36

The Limited Impact of Financial Sector Reforms in Zimbabwe

Published on 1 January 1996

The post-independence Zimbabwe government did not interfere significantly with the operations of the banking system, despite the existence of a large government-owned commercial bank, and a commitment to socialist ideology and to reducing inequality.

The government regarded the commercial banks as an integral part of the modern business sector, whose privileges it did not dare to attack for fear of outflows of capital and skilled labour. The commercial banks appeared to have kept pressures for corrupt lending within manageable limits, despite the widespread corruption elsewhere in the public sector.

Financial liberalisation achieved very little. Financial ratios declined during the 1980s, and this was not immediately reversed. The authorities did not licence indigenous commercial banks, despite extensive political pressure for the growth of African-owned businesses. Although locally-owned non-bank financial institutions proliferated, they did not lend significantly to small businesses. However, revised banking legislation was long delayed and bank inspections were not allowed under the existing banking laws, so licencing of indigenous commercial banks would have been premature. Competition increased among expatriate commercial banks, but mainly for corporate business so that it had little impact on retail banking services.

Cite this publication

Harvey, C. (1996) The Limited Impact of Financial Sector Reforms in Zimbabwe, IDS Working Paper 36, Brighton: IDS.

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Publication details

published by
IDS
authors
Harvey, Charles
journal
IDS Working Paper, issue 36
isbn
1 85864 074 1
language
English

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Region
Zimbabwe

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