- Development banks play a critical role in promoting economic growth and development by providing long-term finance to businesses in various sectors of the economy.
- In Zimbabwe, the government has established several development banks to support specific sectors such as agriculture, industry, and small and medium enterprises.
- Examples of development banks in Zimbabwe include:
- Infrastructure Development Bank of Zimbabwe (IDBZ)
- Agricultural Development Bank of Zimbabwe (Agribank)
- Industrial Development Corporation of Zimbabwe (IDC)
- National Development Bank of Zimbabwe (NDBZ)
- Small and Medium Enterprises Development Corporation of Zimbabwe (SMEDC)
- Zimbabwe Women’s Microfinance Bank (ZWMB)
Features of Development Banks in Zimbabwe:
- Ownership: Development banks in Zimbabwe are usually owned by the government or a consortium of private investors.
- Long-term finance: Development banks provide long-term finance to businesses in various sectors of the economy, which is often not available from commercial banks.
- Targeted sectors: Development banks in Zimbabwe have a specific focus on supporting specific sectors of the economy such as agriculture, industry, and small and medium enterprises.
- Risk-sharing: Development banks often take on higher risks than commercial banks, and as such, they often share the risks with their clients.
- Non-profit: Unlike commercial banks, most development banks are not profit-driven, and their primary objective is to promote economic growth and development.
Functions of Development Banks in Zimbabwe:
- Financing: Development banks provide long-term finance to businesses in targeted sectors, which is often not available from commercial banks.
- Technical assistance: Development banks provide technical assistance to their clients to help them improve their operations and increase their chances of success.
- Investment promotion: Development banks promote investment in targeted sectors of the economy by providing finance, technical assistance, and other support services.
- Capacity building: Development banks support the capacity building of businesses by providing training and mentoring services.
- Job creation: Development banks contribute to job creation in targeted sectors of the economy by providing finance and other support services to businesses.
Benefits of Development Banks to Businesses:
- Access to long-term finance: Development banks provide long-term finance to businesses, which is often not available from commercial banks.
- Targeted support: Development banks have a specific focus on supporting specific sectors of the economy, which can provide businesses with targeted support and access to specialized services.
- Technical assistance: Development banks provide technical assistance to their clients, which can help businesses improve their operations and increase their chances of success.
- Job creation: Development banks contribute to job creation in targeted sectors of the economy, which can benefit businesses by increasing demand for their products and services.
Limitations of Development Banks to Businesses:
- Limited availability: Development banks in Zimbabwe have limited resources, and as such, their availability is often limited.
- Limited coverage: Development banks often have a specific focus on supporting specific sectors of the economy, which can limit their coverage and availability to businesses in other sectors.
- Higher costs: Development banks often charge higher interest rates and fees than commercial banks, which can increase the cost of finance for businesses.
- Bureaucracy: Development banks often have more bureaucracy than commercial banks, which can make the process of accessing finance and other support services more time-consuming and challenging for businesses.
