Zimbabwe: Banks Raise Red Flag Over Policies

Zimbabwe's banking sector has singled out policy inconsistency as the biggest threat to its sustainability, citing conflicting statements on currency reforms.

Bankers' Association of Zimbabwe (BAZ) president Webster Rusere told Standardbusiness in an interview last week that government's communication around the re-introduction of a local currency was confusing.

"I think the biggest challenge facing the banking sector is policy inconsistencies," he said.

"For example, you cannot say that you will be introducing a new currency in 12 months only for you to do it way earlier.

"So, I think we need some policy consistency."

In June, the government made the real-time gross settlement (RTGS) and bonds notes as well as coins the sole legal tender, ending a decade

of dollarisation.

The move took many by surprise as the government position was that the re-introduction of a local currency was months away.

Last month, Finance minister Mthuli Ncube told Bloomberg that the Reserve Bank of Zimbabwe would soon issue new notes and coins to replace

the quasi-currency.

However, a few days later Ncube was quoted saying the country would not introduce new notes. He said the Zimdollar would remain

constituted of bond notes and coins, RTGS and mobile money.

Local banks that recently started publishing results for the half year ending on June 30 have also flagged lack of policy consistency as

a major challenge.

Stanbic Bank Zimbabwe chief executive Joshua Tapabgwa, in a statement accompanying the bank's results, said the currency reforms had

serious implications for the financial institution's operations.

"These policy changes brought massive challenges to the bank as they all required immediate compliance, regardless of the need to amend IT

systems to cater for them," he said.

"The bank managed to surmount the challenges brought by these changes, and we hope for policy stability in the future in order to

minimise disruptions to business and the attendant costs to comply with the new policies and regulations."

A research firm, IH Securities, in a recent report on the banking sector, warned that the re-introduction of a local currency posed a

threat to the stability of local banks.

IH Securities said the currency reforms had created a mismatch between foreign currency assets and liabilities.

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