THE Reserve Bank of Zimbabwe (RBZ) has urged banks to integrate sustainability into risk assessments and help businesses manage environment-related risks.
Experts emphasise that prioritising sustainability is crucial for Zimbabwe to avoid past mistakes and secure a prosperous future for future generations.
Zimbabwe, like much of the African continent, is dealing with the impacts of climate change, including rising temperatures, prolonged droughts, and frequent flooding.
In response, environmental, social, and governance (ESG) standards have become an increasingly important factor in business operations and investment decisions. These standards evaluate a company’s commitment to environmental sustainability, social responsibility, and ethical governance practices.
Reserve Bank of Zimbabwe governor, John Mushayavanhu
“The Reserve Bank is giving priority to promoting sustainable finance across the banking sector. Sustainability is no longer just a buzzword,” RBZ Governor John Mushayavanhu said in a speech delivered on his behalf by Susan Kabungaidze, the RBZ’s deputy director for bank supervision, at the official opening of the Bankers Association of Zimbabwe (BAZ) offices.
“Integrating sustainability into business practices is becoming increasingly important as customers prefer ESG-responsible institutions, and as bank stakeholders demand compliance,” Mushayavanhu added.
He also urged the sector to “continue to integrate sustainability considerations in risk assessments and support businesses in coping with environment-related risks.”
Mushayavanhu highlighted the need for financial institutions to adapt to a rapidly evolving environment while managing risks effectively.
“With increased digitisation and regular use of AI comes the pressing need for robust risk management systems, hence the need to fortify defences against fraud and cyber threats,” he said.
In addition to sustainability, the RBZ stressed the importance of promoting financial inclusion across Zimbabwe.
Mushayavanhu encouraged banks to create an enabling environment for ordinary citizens to access affordable banking services.
“The sector should be innovative in promoting broader access to financial services by our population. Such inclusivity will ultimately enhance economic resilience by reducing vulnerability,” he noted.
The governor also called on banks to support the government’s developmental goals, particularly the National Development Strategy 1 (NDS1) programs.
“The financing of NDS1 programs and projects is premised on strong, sound, and resilient banking institutions. The sector must continue its efforts to support this transformative economic agenda,” he stated.
The RBZ’s 2024 first-quarter report revealed that banking institutions have played a critical role in supporting economic growth by providing significant funding to the productive sectors of the economy.
As of March 31, 2024, all banks exceeded minimum capital requirements, ensuring their capacity to continue fulfilling their financial intermediary role.
Despite these positive developments, the report noted a slight increase in the non-performing loan (NPL) ratio, though the overall health of Zimbabwe’s banking sector remains strong. newsdesk@fingaz.co.zw