Harare– South African banks have effectively shut the door on Zimbabwe after giving notice they will no longer be supplying
the country with cash in United States dollars leaving monetary
authorities in a quandary, a top Reserve Bank official has said.
Zimbabwe has since 2009 when it dollarized been importing the
greenback from South Africa as Harare is under United States
sanctions.
As a result of the embargo, the country dollarized but without the
permission of the United States – the only country that can print and
supply US dollars.
Reserve Bank of Zimbabwe deputy director financial markets, William
Manimanzi said the cancellation of US dollar supplies had placed the
country in a difficult position as it required hard cash especially to
pay among others, small scale gold miners.
“Ordinarily we import the cash from South Africa and most of the
banks, due to what is called de-risking issues, have now given us
notice that they can no longer provide our own local banks with cash,
so we are in a catch 22 situation,” he told small scale miners at a
post monetary policy breakfast meeting in the capital.
“The only bank that had remained is FNB and they gave notice in
December that they will no longer be supplying local banks with cash.”
“De-risking” refers to the act of exiting relationships with and
closing the accounts of clients considered high risk by financial
institutions.
Zimbabwe is generally classified as a high-risk country, a situation
made worse by sanctions imposed on the Harare by some western
countries, the United States especially.
Manimanzi said he believed the country had adequate hard currency
notes to meet its needs but the challenge was that it only circulated
in the informal sector due to lack of confidence in the banking
system.
“It’s confidence issues. This economy may have enough cash but that
cash is not in the formal system. It’s in mattresses, pockets,
informal markets,” he said.
While US dollar notes have largely disappeared in the formal system,
small scale gold miners had remained the only sector where producers
were paid directly in hard cash after delivering their gold.
In the meantime, the miners said they were unhappy with the decision
by the central back to cut their foreign currency retention levels
from 70 percent to 55 percent in the monetary policy presented last
week.
But Manimanzi said the move was necessary as it allowed the central
bank access to hard currency to pay for other critical imports such as
fuel and electricity.
