When you see the list of things Zimbabwe imports it’s hard for you not to wonder: Is there something this country does not import? I mean we import everything from razor blades to matches. Now you can add another thing to the list: USD currency.
Yes, we import those flashy dollar bills and most of them come from South African banks. Unfortunately due to something called risking all South African banks have either terminated access to this cash or have given notice that they will no longer be supplying Zimbabwean based banks/businesses with USD cash. This process is called de-risking.
According to William Manimanzi, the Deputy director of financial markets at the RBZ the problem could be a result of the fact that we are not officially a dollar economy
I think you are all aware that we are not officially dollarised. When I say officially dollarised, I mean we don’t have an agreement with the United States that we were going to adopt their currency officially; we just unofficially dollarised. What that means is it’s very difficult to bring cash (USD) in this economy. Where do we get our cash (USD) from? Ordinarily, we import from South Africa and most of the banks due to what is called 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. The only bank remaining was FNB and they gave notice in December that they will no longer supply our own local banks with cash.
This is hurting money transfer agents
This has been hurting money transfer agents a lot. Recipients expect to receive their hard currency intact. This means money transfer agents have been importing cash into Zimbabwe and they are getting this cash from South African banks who like dominos have been terminating MTA (money transfer agents) accounts.
This has also hurt the gold business as small scale miners expect to be paid in cash.
What is de-risking
According to World Bank:
Global financial institutions are increasingly terminating or restricting business relationships with remittance companies and smaller local banks in certain regions of the world – a practice that is called “de-risking.”
- de-risking is indeed happening in pockets around the world – but its effects are unevenly distributed, with some regions more affected than others.
- Smaller countries with limited financial markets are particularly vulnerable to de-risking practices, and we are seeing evidence of this, notably in the Caribbean region.
and why are South African banks doing it ( lots of paragraphs where I am speculating)
All the banks seem to be saying that there is a risk associated with dealing with MTAs and Zimbabwe’s banking institutions. According to the World Bank de-risking is happening because banks are weighing the cost and benefits of maintaining these accounts/relationships and coming to the conclusion that they are not worth the trouble.
For Zimbabwe, it can really be a sanctions issue. ZIDERA is ostensibly about targeted sanctions blah blah but the truth is that it sends the message that Americans have not really warmed up to our government or Zimbabwe as a whole. If you didn’t know, the truth is that the U.S pretty much has a hegemony over the world’s financial systems. The fact that we are using the USD without permission puts us further firmly within their grasp.
MTAs already suffer from a high risk of what are known as ML/TF (money laundering/terrorist financing ) risks. Experience has shown that terrorists and money launders and fraudsters make constant use of these channels. Banks these days live in fear of being on the receiving end of the wrath of anti-money laundering/counter-terrorist financing (AML/CTF) regulatory authorities.
When it comes to fining banks for violating agreements and rules the U.S is really up there. They really know how to crack the whip. The risk for SA banks that someday they may be summoned and having their behinds lashed is probably too high compared to what the accounts are bringing in.
13 comments
…..and we all fall down!!!!!
some people will continue to deny the effect of sanctions and it is sad.There is this myth that if you speak the truth on sanctions then you a a govt of Zim sympathiser which is really a dull way of putting accross an argument.
Sanctions are real period and they are not targeted
Corruption and human rights issues are real in Zim period and they are pepetrated by ZANU PF.
Both should go unconditionally and neither should be tied to the other they both need to go.
Had a friend who wanted to start newspaper printing biz . . . he could not buy equipment directly from Germany as he was clearly told your country is under sanctions.He had to import the equipment to SA first and Zim later.That means you paying duty twice.At the end he just gave up moved to SA and is now doing good.
I wish people could tell the truth about sanctions ,They are there and they harming people who have nothing to do with ZANU’s misrule.
Rule of law first, and then sanctions can go. They are both intertwined.
ZANU is not interested in fixing the rule of law.You just dont get it do you.They are not interested in fixing their pockets i thought you would have learnt something over the past 20 years of sanctions.You think they are bothered???.In the meanwhile i still have to feed my family so you are saying i should stop feeding my family because there is no rule of law.
The problem is Zim is there is a middle class that goes to work they are the ones that shout loudest about rule of law.Some of us we need to scrap for a living.We cannot access finance to run our biz.If i try to open an offshore account i am told that my country is under restrictions how then do i get paid for my online jobs.I cant do further online certifications for my career i have to travel to SA for that.If i try to do it from Zim i am told your country is under restrictions.
You just dont get it do you.
Anway good luck with the rule of law in the meantime our families go hungry.
You can receive payments online or pay for stuff using online wallets. Payoneer is there, skrill is there. Etc.
Those are money transfer platforms.if you do work for some of the large orgnisations in us and uk they insist you get paid through local channels.eg in the Uk payments are linked to the HMRC (revenue collection) gateway and for tax purposes they reconcile what you are paid against the revenue and tax deducted.Your assumption here is people do not know about Payoneer and skrill.I suggest you do research on the BACS payment system as well.People do offshore contractual work that can run for a year or so and that means in some instances you are liable to pay tax on revenue earned in those countries.It means your salary is processed through the payroll.Some payments systems used by some of the companies do not have an international payment facility more like zimswitch.This means you will need to open an offshore bank account.
The denial in these streets is amazing anyway will leave it like that no point in arguing over this
Who keeps voting for zanu pf if their rule is giving us harsh environment to trade in? We shouldn’t vote for zanu or at least hold them to account for their actions. Sanctions are a RESULT of bad behavior. Stop avoiding the issue here
the issue was never avoided if you read above i clearly said ZANU should respect the rule of law.What i am against is to lie that sanctions are targeted.Read to understand not oppose.
The majority of the people didn’t vote for pf. 50.8%. I don’t think so
The truth is sanctions exist AND they are targeted. The issue is, once potential investors/partners/suppliers hear ‘sanctions’, they think it is a total blockade and stop right there. Only a few are motivated enough to look into the extent of the sanctions and how they actually impact their potential activities. The government AND the zim business community should realise and accept that reality and ACTIVELY work to shift that perception and educate those potential investors/partners/suppliers on the true scope of those sanctions coz the Americans and Europeans certainly won’t do it! Could your friend had avoided the hassle of a double import bill if the Germans had a true grasp on what the sanctions actually are? Maybe not, but the chances of success with that particular supplier and any of the other players in the printing press game would have gone up by a few points at the very least! They like making money too!
Ironically, the whole ‘sanctions ate our…’ scapegoat narrative/propaganda is probably going much farther than Zanu anticipated and perpetuates that perception. While the sanctions stand, we need to work around the stigma they bring by proactively making them easy to understand through educating and flooding potential investment channels with that information. It should be the first thing people see when they google sanctions zimbabwe!
How long have our banks and MTAs been importing cash? Where were the sanctions all along, why is it it only happening now that these banks de-risk because of sanctions?
Dzanguwo, that is a very good question. I suspect that there is something else going on here, especially when authorities start talking about money laundering and terrorism financing. (It was the same line used against crypto currencies, now that there are less crypto millionaires those worries have all but dissappeared???) It is not like money transfer transactions are annonymous, every transaction has a paper trail, ID , phone numbers, transaction numbers that can be followed up on and are probably archived on someone’s server somewhere. Just like any other bank transaction.
If it is so risky for these banks to supply us with cash, why were they doing it in the first instance, its not like a war has suddenly broke out in Zim. Fake, those SouthAfricans are fake, f*ck them. #The North remembers #GameOfThrones.
GET OUT NOW.