Will the Zimbabwe govt ban online payments?

By Staff reporter | 01 Jul 2019 at 19:32hrs
Despite the latest pronouncement of Statutory Instrument 142 of 2019, which banned transacting in foreign currency to settle local payments in Zimbabwe, we are currently making smooth foreign payments to settle various transactions using visa cards, master cards, or PayPal. Those who are using services like Payoneer as well are currently enjoying smooth transactions with traditional banking limits, but the forex shortage problem is a big scare.

The government has put in a cap of daily withdrawal to US$1000 from personal accounts while most banks are up to US$5 000 per day on online transactions, but here is a big problem. Why do we still have bank limits when individuals and banks are directly funding their own nostro accounts?

When government does not have foreign currency reserves and allows independent institutions like banks to run their own nostro settlements, then Zimbabweans should not be worried about the  Reserve Bank mopping up the last free funds in foreign currency accounts.

This is a confidence issue and government has a strong role to clearly state that it won't be interfering in free funds neither should it look like it wants part of the same reserves, because people have not forgotten about what happened in 2008.

The moment players feel that their FCA accounts can be vulnerable once more they will simply move away reserves and immediately, there will be externalization and funds will be kept in offshore accounts.

This is detrimental and I'm sure the government also does not want to see this happening.

In a financial statement update, the government said that Zimbabwe is currently sitting on a total of $1.2 billion balance Nostro , both from local and foreign help.  

Zimbabwe is recorded to have 133,633 foreign currency accounts, of these a total of 111,069 holds less than US$1,000 with a total of US$4,036,509. This means $800 million is still stuck up with corporates, who technically have been blocked from the withdrawal of these funds, but can still make their international payments and salaries.

This sector holds the free funds reserve and there needs to be a stronger statement that they shall be allowed to independently operate without any fear of future interference, then forex availability will not become the next scare in Zimbabwe.

The amount of foreign currency is almost equal to the total of RTGS in the system, which was recorded to be around $1.2billion as well, but the bulk of the money in stocks.

Free money must be allowed to move freely as this puts a lot of confidence into the system. Liberalizing the banking sector will drive a positive message to depositors who in turn gives back trust into the system towards future growth in deposits and reserves.



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