Reserve Bank of Zimbabwe governor John Mangudya has encouraged citizens to cultivate a savings culture to drive economic growth and these services must include savings in banks, pensions and capital markets.
During a Zimbabwe Economics Society virtual meeting, Mangudya said before the culture is established, economic stability is critical as a basis for implementation he also abided on issues around restructuring confidence in Zimbabwe’s financial services, saying Zimbabwe must adopt a coordinated approach which is a global standard.
“Before that is achieved we need to ensure we have a stable economy so that it is not firefighting. We now smell stability; we now have to ensure there is coordination and harmonization of governance and laws,” Mangudya said.
He said the central bank is committed to ensuring monetary and financial systems stability.
Speaking to BusinessMail, Development Economist Prosper Chitambara highlighted that savings are critical for economy growth since they create a pool of domestic resources that can be deployed for investment purposes.
“Economically developed countries have developed on the basis of strong savings culture in the case of China their savings to GDP averages not less than 30%. In Zimbabwe we haven’t been doing very well in terms of savings and investment for the past 20 or so years our savings have averaged below 1% of GDP and investments have been less than 10%,” said Chitambara.
Chitambara attributed the low savings culture to the chronically inflationary environment and underlined the need for authorities to put in place economic fundamentals to encourage the culture.
“To promote savings we need a very stable macro-economic environment that is typified by law and stable inflation, that has not been the case for Zimbabwe and as a result real savings have actually been eroded that has also affected our investment outlook and profile which explains why even our foreign direct investment numbers have actually been on a downward trajectory,” said Chitambara.
He further stated that there is need to address issues of macro-economic stability over a long period of time.
“When we do that we will be able to restore back the confidence by economic agents, households and businesses, once there is confidence, our savings given our investment numbers will begin to trend upwards,” Chitambara said.
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