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Zim banks villains again, too eager with bank charges on civil servants’ bonuses. Fair?

Bond notes, USD

Banking in Zimbabwe is upside down. This is something we have talked about multiple times. Zimbabwean banks are so risk averse they will do absolutely anything before they try core banking activities. Now, we reach a point where the Ministry of Finance has to demand that they ease up on the charges.

What have they done now? I hear you ask.

How the chapter started

The Zim govt announced that civil servants would be getting their bonuses in USD. Of course, economists had thoughts on that move but it’s not what we are here to discuss. The USD bonuses were announced and that’s that. Knowing that the Zimdollar salaries they have been getting all year are too low, the US$700 bonuses were somewhat commendable.

Problem is, bad habits are hard to break. Zim banks have been left to charge their customers like there is no tomorrow. For years, Zimbabweans have complained about high bank charges, especially in the context that there is no option to exclusively use cash. We are all forced to use banks to receive payments and to transact on the daily. There simply isn’t enough cash to break out of the system.

So, the banks have been surviving on these exorbitant charges. Most Zim banks earn more from bank charges and commissions than they do on what should be the main source of income – lending activities.

Banks vs civil servants and pensioners’ bonuses

You saw this coming. Some banks saw the US$700 bonuses and drooled all over themselves. Thinking how much of that they could take for themselves. After all, every single one of the civil servants and pensioners has to get that money from a bank. They had them in a trap, civil servants could complain all they want but the banks were set to make a killing. In USD no less.

Do not think for a second that these charges they take ever flow back into the economy to drive growth. The RBZ has been imploring them to lend out the US$1.7 billion sitting idle in foreign currency accounts. $1.7 billion just gathering dust in vaults whilst the economy is full of undercapitalised business failing to get loans.

So, back to the $700 bonuses. Some of our beloved banks thought to themselves, ‘what do these civil servants need USD for? Let’s give them Zimdollars at the bank rate and keep the USD for ourselves.’ So they did just that. Instead of getting their lifeline, civil servants were shortchanged by their banks. 

There is insult to the injury. Those banks saw the opportunity to introduce, in the words of the Finance ministry, ‘some arbitrary charges’ to maximise on their takings. The ministry says some of these banks are taking ‘significant portions’ of the bonuses in charges. 

So first, they forcibly convert the bonuses to Zimdollar at a low bank rate and then they charge fortunes in bank charges when the civil servants try to cash those Zimdollars out. The e-word cannot be used lightly, but in this case it’s accurate to say this is pure evil.

Mthuli Ncube to the rescue

The Finance ministry released a statement today telling banks to desist from this behaviour. 

  • Civil servants are to get their bonuses in USD in full. 
  • There are to be no deductions or levies on the bonuses
  • Govt and banks to agree on charges for these bonuses and it is to be minimal. (Note though that the agreed charges will apply only to these bonuses. Outside of that, expect the same high charges you are used to, for the moment at least.)
The Ministry of Finance on Twitter

We’re still mad at the govt

While we are mad at banks for the high charges, we are also forced to understand why they are reluctant to lend out the over US$1.7 billion sitting idle. We grudgingly concede that the Zim economy is tough and that our history teaches that lending that money out could be a huge mistake. 

The banks indeed have told the govt the assurances that they would need before they start lending out. They want to know that if they lend out in USD they will be able to collect in USD. In the past, they lent out in USD and then we introduced a new currency and new policies that put one over them. 

Borrowers were told they could pay back their USD loans in bond notes because in the eyes of the govt at the time, there was literally no difference between the USD and the bond note. The banks took losses on those loans and so it’s no wonder that they are loan-shy now. They do say, once bitten, twice shy.

Back to the charges though. Seems we are paying for the sins of those that got USD loans before the bond note was introduced. However, the govt knows about this state of affairs and yet does nothing about it. They know the bank charges are too high in this cashless economy. 

The problem is, the banks would be in trouble if it weren’t for bank charges. Yet, the govt needs these banks to survive because they believe they are essential for the stability and success of the economy. So, the govt turns a blind eye to the exorbitant charges. 

They also know that they cannot give banks the assurance that if they lend out in USD they will be able to receive that money back in USD. They want the option to move away from the USD to remain on the table. So it’s a stalemate when it comes to lending. 

In closing

Zimbabwe is a frustrating country. You are forced to sympathise with predatory behaviour because in the end, the economy itself is the biggest, top-of-the-food-chain predator. 

We don’t even know what the USD situation is like in the background. Did the govt provide the USD to these banks in time? Or are they to use the ‘idle’ funds they are sitting on? 

All in all we know the bonuses will cost US$90 million. I wonder what impact that will have in the economy. Remember, Econet had to pay back their $73 million debt over a few years because the RBZ worried that US$73 million injected into the economy at once would cause damage. What of a US$90 million liquidity injection? 

Welcome to Zimbabwe, if you just landed.


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28 thoughts on “Zim banks villains again, too eager with bank charges on civil servants’ bonuses. Fair?

  1. Correction not all civil servants are getting 700usd, the maximum amount to be given in USD is 700, some are getting 200, it all depends with your grade

  2. Banks have ripped their customers off for decades! Look at the “Miscellaneous Debits”, “Cash Counting Fee” etc charges… It’s gone on for decades… Anything to get money out of your account and into theirs!

  3. Was that just a positive thing Ncube did?…one positive thing after a string of negatives. It’s time he really deals with our banking sector. It has been a s*** show in 8K

    1. That’s what makes me suspicious. Why pretend to act now? Is it because of the political points it will score? Cause the banking industry has been a mess for years and they know this.

  4. There in no incentive to bank at the end of the day. The charges are really ludicrous.I have to think twice on some transfers. Because the Amounts are low and the bank charges are to high .I have when noticed that my debtors are paying me as a worker to avoid these charges.I beg to differ in what they lost during the sum dollar conversion because they simply zeroed our accounts so they made far more than they lost

    1. I agree that we are the ones that lost more when our accounts were reset. But they still hated that they lost that forex they loaned out. And those losses were enough to sink some banks so it wasn’t trivial. However, we don’t feel sorry for them cause we lost all we had.

  5. Will there be action from the Ministry, or they will tell us they have done their job by giving the US dollar bonuses as they promised, and what happens after that is not of their concern for action? By the way, which Ministry controls and regulates these banks which the Finance Ministry agrees that they have been wayward?

    1. I think there will be action but it’s a simple issue to get results on. We have too few commercial banks, and only a few of them are said to be engaging in this. However, the point you raised is important. Who is supposed to be on watching these banks? They have been doing this for years and yet only now are we getting some response from the Ministry. And the response is a targeted one too.

  6. Not everyone is getting $700. The govt doesn’t have money for that. Banks are ripping us off my guy. Today at agribank in masvingo they were just giving people $40. The govt must snap into action and punish these idiots that don’t want with our money

    1. What of us private pensioners who get paid in Zwl ( as pension fund not allowed to pay local pensioners in Forex whilst foreign pensioners are allowed to be paid in Forex) and who visit family outside the country for the December holiday but now being forced by government to quarantine at hotelsbecause we have visited for more than 14 days and insist on being paid in Forex . Can government guarantee to allocate the Forex to pay the hotels . Please have a heart and some feeling for locally ZWl paid pensioners . Government please think about locally paid pensioners or allocate funds for paying hotels in Forex .

  7. What of us private pensioners who get paid in Zwl ( as pension fund not allowed to pay local pensioners in Forex whilst foreign pensioners are allowed to be paid in Forex) and who visit family outside the country for the December holiday but now being forced by government to quarantine at hotels because we have visited for more than 14 days and insist on being paid in Forex . Can government guarantee to allocate the Forex to pay the hotels . Please have a heart and some feeling for locally ZWl paid pensioners . Government please think about locally paid pensioners and allocate funds for paying hotels in Forex .

    1. Or alternatively ensure all hotels accept Zwl payments at the prevailing rate . Government need to ensure forex available for quarantine or zwl payments acceptable at the quarantine approved hotels and Centers

  8. Isn’t this another case of phantom “detractors”? Which banks are forcefully liquidating and why haven’t they been taken to task by the relevant authorities.

    Personally, I just hope the banks did receive real USD from the government, otherwise that’s how there will be rolling cash shortages and subsequently another account reset.

    I also don’t see why charges should be waived/reduced just for civil servants. It means every other bank client will foot the cost, because it’s definitely not coming out of the banks profits. Meanwhile, government will get all the praise and those that are USD clients will have a tariff review in the near future.

  9. This explains why we have just over 300 000 Zimbabwean nationals living in South Africa oblivious to the ever growing threat of xenophobia same of which is visited upon them by their Black African compatriots!

    1. We have 2 to 5 million Zimbabweans living in South Africa as we speak. Too many Zimbabweans in SA. Unemployed south africans believe that we are the reason they have no jobs. That’s why they’ll do anything to get rid of our people there. It’s sad to see black people destroying each other

  10. I have always been taught in Business Studies that banks make money from the service charges they levy on depositors’ funds. What has changed here? Isn’t the government even taxing mobile money transfers? Don’t be set upon each other . Banks don’t transact for free.

    1. If we all get the same pay you won’t see anything like this,others are getting 700 or 200, thats why it is better to be your own boss you won’t blame anyone😂😂 wow.They say go to university to learn big things, i say go to the internet cafe and download youtube videos on how to do things like designing rings, neckles cars with CAD ,3D PRINTER or making cartoons with those software like adobe, making sofwares Adalo you don’t need coding skills in this one. The problem you spend more time learning something that you will never use, learning to work for someone😂😂 i surrender, afuthi nikisi.

  11. I am surprised just how everyone fell for what Prof Ncube just did there. Hero, my foot, this whole exercise, USD bonus plus the directive to allow civil servants to withdraw without charges is all a campaign. Elections are coming. Not to mention its a slight against this government’s efforts to dedollarize. If you go back to the press releases anouncing the USD bonus, there is emphasis on all this being the President’s idea.
    Also, Prof Ncube once ran a bank, he could have anticipated what the banks were going to do and issued the directives before the money was released, but he waited till after the fact.
    Its truly amazing that after 40 years the average Zimbo cannot tell when they are being played like a cheap video game. (x,circle,square,jump = re election)
    Come next election they undoubtedly will endorse the same government that lines their pockets with a currency thats losing value. The irony of it all is the government is the one weakening the currency. #KeepThemPoor. They are easier to control that way!!!

  12. Taking to yesteryear where banks used to disburse money through ATMs as long using zimswitch populace was able to withdraw money at any zimswitch enabled ATM. Introduction of Zimdollar brought confusion and corruptuon across all money transactions with banks and ecocash cashing in on exhobitant charges to stay afloat the market forces. The same happens woth supermarkets where they charge their goods using black market price yet if one is using cash usd they use interbank rate. RBZ, Ministry of finance have to bring sanity and harmony in Zimbabwe monetary platform

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