THE Zimbabwe Taxpayers Platform (ZITAP) has called on the Reserve Bank of Zimbabwe (RBZ) to review and reduce prevailing bank charges, saying the high service costs are discouraging citizens and businesses from using formal banking channels and undermining financial inclusion.
The call comes amid concerns over the high cost of banking in Zimbabwe, with both individuals and small enterprises complaining that monthly maintenance fees, transaction charges and the 2% intermediated money transfer tax (IMTT) are eating into the already low incomes.
In a letter addressed to RBZ governor John Mushayavanhu submitted this month, ZITAP said transaction fees, monthly maintenance charges and the IMTT had collectively become increasingly burdensome to the transacting public.
“As taxpayers in Zimbabwe, actively engaged in cross-sectoral economic activity as well as paying tax, we have witnessed first-hand the growing concern among citizens and businesses regarding the high cost of banking services,” it said.
The organisation warned that the cost of banking in Zimbabwe is eroding incomes and pushing economic activity back into informal systems.
“From transaction fees to monthly maintenance charges, these costs have become increasingly burdensome, particularly for smallholder farmers, informal traders, small-scale miners, workers and emerging entrepreneurs who form the backbone of our economy,” ZITAP said.
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The taxpayers advocacy group said Zimbabwe’s monthly average banking fees, which range between US$15 and US$25 depending on transaction volume, have become unsustainable for low income earners.
When combined with the IMTT, ZITAP said these costs penalise those complying with government calls to bank and transact digitally.
“We respectfully request that the Reserve Bank initiates a comprehensive review of prevailing bank charges, with a view to establishing a more equitable and transparent fee structure,” the letter read.
“Such a move would align with national goals under Vision 2030 and reinforce public confidence in our financial institutions.
“Zimbabwe’s monthly average ‘bank fees’ (fixed charges plus withdrawal fees) range between US$15 and US$25, depending on one’s volume of transactions.
“When one factors in the 2% intermediated money transfer tax, it means citizens and businesses suffer the cost of complying with the government’s plea to bank their money and transact online.”
ZITAP said the current regime of charges was indirectly encouraging pillow banking, as individuals and businesses choose to keep cash outside formal systems to safeguard their small margins.
“These bank fees further erode incomes that are already generally lower than similar job incomes within the Southern African Development Community bloc,” the platform noted.
The organisation urged the central bank to conduct a comprehensive review of prevailing fees with a view to establishing a more transparent and equitable structure that aligns with national development goals under Vision 2030.
ZITAP argued that reducing banking costs would not only promote inclusion, but also stimulate savings, investment, and trust in the financial system.
It said the sustainability of the banking sector should not rely on high service fees, but on a thriving, inclusive credit economy.
“The banking sector must be given the leeway to focus on its core business, credit creation,” the group said.
“If the majority, 67% population in rural and farming areas, approximately 85% of transactions that are informal sector-based, and low-income earners are excluded from the financial system, it paradoxically means financial institutions would have to rely on fees and charges to survive.”
When more citizens participate in the formal financial system, ZITAP said bank charges would naturally decline because institutions benefit from larger transaction volumes and improved liquidity.
“That decline would likely lead to, as is the case globally, more financial inclusion, an active credit economy, increased trust in the financial system, and a natural collapse of the informal forex market,” the group said.