South African banks which have been the major sources of United States dollars for Zimbabwe since dollarisation 2009 have cut off supplies as they up the gear towards de-risking, Reserve Bank of Zimbabwe (RBZ) director, William Manimanzi has revealed.
Speaking on the sidelines of a Zimbabwe Miners Federation breakfast meeting Tuesday, Manimanzi linked the development to the country’s failure to follow proper dollarisation procedures with signs this was now beginning to catch up with the fragile economy.
“I think you are well aware that we are not officially dollarised because we do not have an agreement with the United States of America’s government to use their currency because we just unofficially dollarised the economy.
“What that means is that it is difficult to bring in cash into this economy. Ordinarily, we import the cash from South Africa and due to de-risking issues, most banks in that country have given us notice informing us that they can no longer provide us with the cash and this means we must now provide the cash to our own banks.
“The only bank that was still giving us cash is FNB bank and just in December they told us that they will no longer be supplying us with the United States dollars,” he said.
Manimanzi said that given the situation, the central bank is forced to look internally for the cash by employing confidence building mechanisms to encourage the public to use banks.
“I think Zimbabwe has its own cash and the challenge is that when that money goes out of the banking system, it never comes bank because of confidence issues as it is kept under pillows, people’s pockets.
“If you go to places like Mbare Musika, you will be shocked to see the huge amounts of forex exchanging hands there,” he said.
De-risking is when financial institutions terminate or restrict business relationships with clients or categories of clients to avoid, rather than manage, risk.
Last year, central bank governor John Mangudya revealed that Zimbabwe has over the past few years lost 102 correspondent banking relationships due to high country risk.
Source : New Zimbabwe