Cashless societies prone to abuse by govts, Canada shows. Is Zim better off for preferring cash?

Leonard Sengere Avatar
RBZ, Harare Business District, Forex Foreign Exchange Auction govt, Monetary Policy Committee (MPC), fintech sanbox

In Zim, the RBZ’s FIU can freeze your account without court order. A fact that won’t scare many who shun the official banking sector.

For various reasons, Zimbabwe has been becoming an increasingly cashless society with every passing year. In the Reserve Bank’s latest monetary policy statement we found out that of the total Zimdollar broad money in the economy, only 0.49% was actual physical currency. In the United States of America, physical cash represents about 10% of the total USD money supply.  

While it is normal for hard physical currency to be a fraction of the total money supply, 0.49% is too low. For years Zimbabwe has had chronic cash shortages. No surprise there if physical cash is less than half a percent of total money in the economy. The cash shortage is made worse by the fact that most Zimbabweans prefer holding all their money as cash. 

The government has been trying to sell Zimbabweans on the benefits of a cash-lite society. The RBZ,

The  Bank  is therefore  encouraging  the  public  to bank  their  cash  and utilise  these  digital and electronic  services,  that  include  credit  and  debit cards,  to  minimise  the risk  of  theft and robberies associated with carrying cash  on  person  or possession  of  large  sums  of  cash  at  premises

There are other benefits too. A significant number of Zimbabweans only deal in cash, something that is possible because of the large amount of physical USD cash (in the billions) that is in the economy but just not in the formal economy. 

By dealing in cash, these Zimbabweans are essentially disqualifying themselves from some crucial financial services like loans. Especially for huge loans like mortgages. Cash leaves no record for loan providers to analyse before granting loans. So, adopting digital services would help both Zimbabweans and loan providers.

While one cannot deny those benefits, one has to look at the whole picture. What are the downsides to adopting these digital and electronic services that the RBZ is pushing? 

Of course the Zimdollar is depreciating rapidly and the RBZ has forcibly converted people’s forex to an inferior local currency before. Add to that the fact that Zimbabweans have lost their savings to bank closures. However there is yet another drawback to the cash-lite option.

The freezing of accounts

Just last week, the RBZ froze the accounts of companies that they suspected of money laundering. This wasn’t the first time the RBZ has frozen bank accounts whilst investigating suspicious activity. 

When we are dealing with terrorism financing and money laundering, few would argue against the RBZ freezing accounts. What would give many the chills is how the definition of money laundering and terrorism financing can be bent to practically include almost any activity. It wouldn’t take too much effort to classify the tithe you pay to your church as some kind of terrorist financing.

Case in point: Canada

Canadians just went through this. Some truck drivers were protesting vaccine mandates and other Covid measures in the country. They felt the govt had overextended its reach by practically forcing them to get vaccinated to cross the US-Canada border, or quarantine upon return. The Zimbabwean govt is also doing something similar to civil servants, forcing them to get vaccinated or risk losing their jobs. 

The Canadian government was not too pleased with the Freedom Convoy, after all the protests were as much anti-government as they were anti-mandates. So, the govt wanted the protests to end as soon as possible.

We are not here to discuss the merits of the Freedom Convoy protest, as it was called. Personally, I value a negative test result more than a vaccination record but that’s neither here nor there. We are here to look at how the Canadian govt shut the whole thing down.

Freezing donations

First, the govt saw that other people, including foreigners, who were against vaccine mandates were donating money to the truckers in the convoy. Donations via GoFundMe had reached about US$8 million. These donations were helping the truckers who were missing out on revenue by parking their trucks all those days.

The govt of course could not let that happen. They told GoFundMe that while the protests had started peacefully, they no longer saw them as peaceful. We have seen similar stuff in Zimbabwe when back in the day, every MDC rally would be labeled ‘violent’ and shut down.  

Those on the ground with the Freedom Convoy painted a different picture than the one the Canadian police painted. This is normal ruling govt behaviour, just like we saw in Zimbabwe in years past.

As a result GoFundMe froze the funds. They decided to redistribute the money to organisations of their own choosing instead, if donors did not request refunds in time. There was an outcry and they were forced to refund the funds to all donors. The fact that they even tried to commandeer those funds should never be forgotten.

Freezing bank accounts

The Canadian govt invoked an Emergencies Act that temporarily gave the govt practically unfettered powers so they could end the freedom protests.  What did they do with this power?

Banks were given the power to freeze “personal accounts of anyone linked with the protests without any need for a court order.” Such individuals’ vehicle insurance could be suspended too.

Like the donation freeze, this was meant to cripple the protest organisers financially. Unfortunately the freezes might have been used on regular citizens who had donated to the truckers as well. One Canadian MP claimed a single mother had her accounts frozen because of a $50 donation she made to the truckers before the protest was deemed ‘illegal.’

The effect

Again, you may disagree with the Freedom Convoy but you can’t deny that they should have been able to protest. All too often when we agree with government decisions we tend to ignore any overreach. I believe that we should protect the right to protest and to limit govts’ power to break them up. This will come in handy when the ruling govt you support is replaced by one you don’t agree with.

I’m sure we can all agree that when all our savings are held in bank accounts, the power of a govt to amend or introduce laws on a whim that may reclassify those savings as illegally obtained is frightening. 

Imagine if some amendment to Zimbabwean legislation made donations to a political party like CCC illegal. Recently CCC raised funds from the general population and all those who donated to that effort would be in danger of getting their accounts frozen or worse.

For most Zimbabweans who are outside the official financial system the threat of freezings carries no weight. Zimbabweans’ preference for cash presents a problem for the govt to combat illegal activity but at the same time the govt would find it hard to use the Canadian govt’s tactics to quell protests. 

The Zimbabwean situation

In Zimbabwe, the Financial Intelligence Unit (FIU), an RBZ arm has the power to freeze bank accounts for holders who are suspected of obtaining the money from illegal activities, money laundering, terrorist financing and from dealing in forex with unauthorised dealers. 

We talked to a lawyer who explained to us the meaning of the Money Laundering and Proceeds of Crime Act which gives the FIU that power. 

The FIU does not need a court order to order the freezing of accounts. So, while Canadians were disgusted by the govt giving power to banks to freeze accounts without a court order, the FIU in Zimbabwe does not need a court order to do the same.

So, it’s actually a wonder that the FIU has not abused this power, to my knowledge. That’s something to celebrate but not all are pleased by this.

The Joint Operations Command (JOC)

The JOC is made up of leaders from the army, police, the Central Intelligence Organisation (CIO) and prison services. These securocrats are not happy with the FIU’s effectiveness or lack thereof, especially in combating foreign currency manipulation. 

As reported, JOC is proposing that the FIU be moved to the CIO. A source close to the action told The Independent,

So Joc is saying if FIU is failing to deal with the companies and people manipulating foreign currency exchange, give us the powers to act. What this means is that FIU is going to become more brutal because they need to protect their reputation.

They (CIO) wrote a position paper arguing for the take-over of financial intelligence from RBZ. They are saying FIU is not doing enough because these companies are committing crimes and no action is being taken.

The security bosses sought to understand why the FIU was ineffective in executing its duties. There was an argument that the FIU has enough teeth guided by law to deal with the issue of financial indiscipline.

As quoted by The Independent

The CIO functions to provide high level security to the state from threats both within and outside Zimbabwe. The JOC sees the rampant forex manipulation in the country as a potential security threat hence why they think the CIO which has better investigative prowess should take over.

The law however places the FIU function with the RBZ. 

There is hereby established a unit of the Reserve Bank, to be known as the Bank Use Promotion and Suppression of Money Laundering Unit. 


So, it would appear that the CIO could not take over the FIU function. However, emergencies and national threats can lead to funny power transfers like we saw in Canada. That is not to mention that they could just amend the requisite Acts to allow for this if no other law could give them that power.

Should the FIU have such power?

The question then becomes, should the FIU, whether under the RBZ or the CIO, have the power to freeze bank accounts without a court order? Would we not rather have a judge go through any account freezing orders to ensure they are justified and supported by the law?

This power bestowed upon the FIU could be abused as a powerful tool to financially cripple dissenting voices. President Mnangagwa agrees that citizens should be able to protest but that won’t stop an overzealous FIU agent from abusing the FIU’s powers to target political opponents or their supporters. 

Therefore, the best solution would require some process to check the FIU’s powers, preferably having a judge ratify any such orders.

Some Zimbabweans question the objectivity of our courts, if that’s the case then we would have only added a stage to the process only to get the same results. That would still be better than what we have currently though. 

With all that said, we realise that Zimbabweans’ mistrust of financial institutions and their cash preference may be protecting them from some tactics that the govt could use. However most organisations, including NGOs, political parties and other humanitarian organisations cannot bypass the banking system altogether. Therefore they will always remain vulnerable to such tactics unless or until we clip the FIU’s wings a little bit. 

That’s unlikely to happen soon, for now we can expect the FIU to actually ramp up its activities under pressure from the JOC. 

What about you, the average citizen?

The truth is that most Zimbabweans are illegally dealing in forex. The informal economy which most of us participate in is mostly cash based and the USD is king there. No individual has access to forex on the formal market and so most obtain it from the black market. That is illegal and is grounds for account freezes by the FIU.

The FIU is unlikely to act on the average person getting US$200 on the streets. For one, they don’t have the manpower to chase the millions of people doing this. Secondly, the amounts that most deal in are too little to warrant action. Thirdly, most don’t even have bank accounts that can be frozen. 

Christians will try to hold on to cash a while longer as they fear the prophecy that a one-world govt will have the power to prevent select people from purchasing anything or participating in an economy in the end times. A cashless society with arbitrary account freezings would appear to allow for that.

Anyway, the FIU is better off chasing the few money changers that serve the public for now. Or the organisations that earn millions of dollars in revenue in Zimdollars and convert it to USD on the black market. We may not like this but the law is clear on it, the following is a crime, 

any offence of buying or borrowing foreign currency from, or selling or lending foreign currency to, a person other than a person authorised under the Exchange Control Act [Chapter 22:05]

So the FIU fighting against that is not the main issue although we may question the wisdom in a law that makes the majority of the population criminals. The main issue is that the door is open for the FIU to be abused to target any individual or organisation. 



  1. DK

    What really is a bank? The ones we have survive on charges for everything from their day to day running, to staff salaries and benefits. They work like parasites and what you give them to keep for you diminishes by the day. Most people who have bank accounts did not choose to have them but we’re forced. If there was an option for salaries to be paid as cash almost all employees would opt for this, and there would only be one or two banks catering for companies.

  2. Canada not so sorry eh

    Did you hear that Canada was looking into making aspects the emergency financial powers into permanent ‘tools’? Lol, between Covid and this, my perception of Canada has gotten so bad I didn’t even bother verifying the work in Canada scam email I got this week😂
    Having to operate in the grey used to be an unfortunate necessity, but now it’s becoming a feature in Zimbabwe

    1. Unfocused Youth

      “Having to operate in the grey used to be an unfortunate necessity, but now it’s becoming a feature in Zimbabwe”

      LOL ^-^

      So funny yet so true.

  3. Imi Vanhu Musadaro

    Not using cashless transactions bedbugs RBZ could freeze your account, sounds like walking on foot because the ZRP could impound your car.

    1. Imi Vanhu Musadaro

      *because RBZ

  4. Dhuterere

    They can freeze bank accounts willy nilly bt nt crypto if gvt oversteps its authority to stifle basic rights pple will adopt crypto currencies than to wake up your bank USD balances having been changed to Bond Notes…

  5. Awoke 01

    Problem isn’t the economy…its about people justifying the amount of power they allow the gvt to have over us…in the beginning, the gvt was initially setup as a tool to serve people…somehow along the way we ended up viewing it as a parent who is always right and never to be questioned…lol the the gvt caught up to that and started demanding more powers from us to reverse the stat quo of it being a servant to us…no voila..we now so caught up with so many trivial and political aspects of life forgetting that hey we gave birth to this thing and nowwe are afraid of it and it’s controlling us??.. This is ridiculous