Report says banks are overcharging borrowers

Findings from the draft national competitiveness report have shown that banks in Zimbabwe could still be overcharging borrowers through charges and the high cost of loans, despite the central bank putting a cap on lending rates. The report says borrowers could be paying effective interest rates on bank loans in excess of 24 percent annually made up of the lending rates, establishment fees and insurance costs.

In terms of the interest rate framework put in place by the Reserve Bank of Zimbabwe, banks may charge interest of up to 18 percent per annum on loans, excluding other loan charges. Lending rates may, however, vary and may be as low as 8 percent per year depending on the class of the borrower and risk.

The findings are part of a study on national competitiveness, which was carried out by the National Economic Consultative Forum, instructed and funded by the Ministry of Finance and Economic Development and its development partners.