The Bankers’ Association of Zimbabwe (BAZ) says financial institutions are forced to keep money in offshore accounts because they fear government policy inconsistencies will harm their businesses.
John Mushayavanhu, BAZ president, told a Zimbabwe National Chamber of Commerce (ZNCC) meeting on Tuesday government appeared undecided on a number of issues including the future of the Zimbabwe dollar.
“In December there was a heated debate on the reintroduction of the Zimbabwe dollar,” he said. “We had never seen such cash withdrawals as we saw in December, it was unprecedented.
“We were moving money from South Africa, flying it in every other day.
“Don’t take Zimbabweans for granted. They think they lost money before and they will not lose it again,” he said.
The country experienced cash shortages during the festive season following a surge in withdrawals from banks.
During the same period, the Zanu PF conference held in Bulawayo passed a resolution to resuscitate the defunct Zimbabwe dollar and dump the multi-currency system.
Last month, Treasury ordered all banks to repatriate 75% of funds they held in offshore accounts as part of efforts to solve the liquidity crunch.
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Mushayavanhu said keeping money in nostro accounts (offshore) did not mean bankers were unpatriotic.
“Yes, on our part as banks, we apologise we were keeping some of our money outside, but it was for a reason,” he said.
“It’s not that we are not patriotic, but we are afraid of what the government can do.”
He said banks needed the nostro accounts for big value transactions and there was nothing illegal about the arrangement.
Mushayavanhu’s remarks came amid reports foreign-owned banks were resisting calls to repatriate funds from their Nostro accounts. The banks reportedly have $312 million in the offshore accounts.
A nostro account is held in a foreign country by a domestic bank and is denominated in the currency of that country.
Mushayavanhu bemoaned the small depositor base in Zimbabwe saying it affected smaller financial institutions.
He said the country had 26 banks chasing $3,3 billion deposits with the top eight banks commanding 80% of the market share.
He added that another $3 billion was circulating in the informal sector and efforts by banks to tap into that market had failed.
“As long as there is no consistency in government policy, it is going to be difficult to get that money,” Mushayavanhu said. The BAZ boss blamed the liquidity challenges facing the economy on the high level of imports. Mushayavanhu added: “We have a serious problem of mismatch in this market. “Depositors have not yet reached the deposit level that they had in the 1990 where a person could go to a bank and put money on deposits for a year, two years or three years.” He said major investors were not keeping money in banks for more than 30 days. Meanwhile, the government must inject $12,5 million into the Deposit Protection Board as seed capital to enable the body to compensate depositors in case of bank failures, Mushayavanhu said He said banks had been paying premiums to the board, which had not invested in any assets because all the money went into administration costs. “Under normal circumstances, the board is supposed to invest the premiums they get,” he said. “They will then use the surplus to pay small depositors, but now the premium is just enough to pay for administration costs,” he added.
