FEARS of raids on foreign currency accounts, poor economic policies and lack of transparency in the running of the country’s economy are main reasons Zimbabweans were shying away from banking their cash and resorting to keeping huge sums of money in homes and offices, an economic expert has said.
As business registers growth in United States dollar sales following the use of the multi-currency system, cases of break-ins and hijackings targeting those carrying large sums of money have become a cause for concern in Zimbabwe.
The government has been accused of punitive policies that have seen people losing their savings overnight, leading to public scepticism in the use of banking facilities.
However, keeping huge sums of money in homes and offices has come with its troubles, including armed robberies that are on the rise across the country.
Prosper Chitambara, a senior researcher at the Labour and Economic Development Research Institute of Zimbabwe, told The NewsHawks this week that the low deposit rates were among the reasons many Zimbabweans are resorting to keeping money at home or in offices instead of depositing in banks.
“If the macro-economic environment becomes more stable, then that enhances the confidence of the people not just in the banking system but also in the whole economy,” he said.
“If government reforms are credible or seen to be credible, consistent, inclusive and transparent, then that obviously enhances confidence in the economy and ultimately in the banking system,” Chitambara added.
On the deposit rates scaring away people from banking their money, Chitambara said: “If the deposit rates are low or below inflation, it reduces the incentive for people to want to bank their money.”
Chitambara said the Zimbabwean economy was highly informalised, adding that traders preferred circulating cash among themselves for profits instead of utilising banking facilities.
“A lot of people in the informal economy do not have bank accounts because most of them do not normally bank their money.”
“Most people in the informal economy sector might not have surplus income to bank,” he added. At the height of the country’s unprecedented economic meltdown, the central bank raided FCAs to save the economy from collapse after gold exports plunged to three tonnes from a high of over 20 tonnes.
Chitambara said government policies, which have been inconsistent of late leading to many losing out, were also a factor influencing the behaviour of the banking public.
In June this year, the Reserve Bank of Zimbabwe raised its benchmark interest rate to 200% from 80% to curb rising inflation.
However, the minimum deposit rate for Zimdollar savings was increased to only 40%, which is below the inflation rate. This means the interest earned from bank savings is not enough to offset the effect of inflation.
Early this month, the country’s organised manufacturing sector lobby group, the Confederation of Zimbabwe Industries (CZI), sounded the alarm bells over rising crime levels, warning that this may affect foreign direct investment.
In its latest report titled Crime Trends in Zimbabwe, the CZI says crime has been on an upward trend, increasing by 12% in the first half of 2022 compared to the corresponding period in 2021.
At the core of this increase are cases of fraud, armed robbery, unlawful entry into premises and theft, evidently resulting in massive losses for the business community and households.
The report shows that many businesses and households have been subjected to armed robberies. Recorded cases of armed robbery in which firearms were used increased to 695 from January to July 2022 from 640 cases in the corresponding period in 2021.
Out of these 695 cases, a total of 100 accused persons were arrested and taken to court, where 28 of them have been convicted. The 9% increase in armed robberies is of great concern to business and the general public.