What we have witnessed in the banking sector is merely a pre-shock warning of what could be eventually coming.
The financial services sector, a critical sector in any economy due to its intermediary role, contains some bad apples and the effect of this could have far-reaching consequences. In the midst of all this, the Reserve Bank of Zimbabwe, which has failed to present its Monetary Policy Statement, remains quiet.
Locally-owned banking institutions could have been hit hardest by the prevailing liquidity constraints affecting the market.
The result has been thousands of depositors boiling with anger as they are unable to access their cash at the many indigenous banks around the country. On Monday, the situation almost turned riotous after incensed depositors who had been coming to withdraw their cash over the last two weeks smashed a door glass at Allied Bank, which is owned by Transport and Infrastructural Development minister Obert Mpofu, himself a Zanu PF politburo member and MP.
Chaos also erupted at Mpofu’s Bank in Bulawayo as the liquidity crunch suffocates mostly indigenous-owned banks in the rush to the festive season. What is worse is that
Allied Bank manager, Ephraim Chidhakwa, was assaulted by angry depositors and had to be rescued by an alert security guard who had to use teargas to disperse the rowdy mob.
Last month, a branch manager with another indigenous bank in Mutare had to seek refuge at a police station with angry depositors in hot pursuit, baying for his blood after failing to access their hard-earned cash. People are frustrated and are desperate to withdraw their cash in time for the Christmas holidays, but are always disappointed as some of the institutions do not even have the cash. This is to say Zimbabwe’s economy needs more than the mild revival of commerce that has been urged by Zanu PF’s economic blueprint Zim Asset.
The country needs real money, but our leaders appear clueless on where to find it. Or they are in denial of the status quo. There is no doubt that the future of our country is grim even as Finance and Economic Development minister Patrick Chinamasa prepares to present his budget statement tomorrow. Our economy remains severely hampered by the country’s desperate shortage of capital. Exports are underperforming on the back of a ballooning import bill, a recipe for disaster for a country using an adopted currency.
What is disappointing is that even pensioners and other senior citizens will not receive their pay until a later date while the bulk of the remaining civil servants will receive their bonuses after Christmas. So there won’t be any merry-making this season.
The cancellation of Trust Bank’s licence just last week obviously has a ripple effect on the financial services sector and more indigenous banks have been affected. The contagion could be enormous for a small economy such as ours.
If there is a run on all local banks as depositors no longer have faith in the sector preferring to keep their money under the pillow, the consequences could be fatal. The people no longer trust local banks. They have every reason to be frightened and government needs to move fast to stop this cancer in the banking system.