Zimbabwe banks given 2 week ultimatum to lower charges

Local banks have been given a two-week ultimatum to review their high service charges and interest rates which have seen depositors' funds depreciating instead of appreciating and lowered the country's banking population to only 30 percent.

The banking sector has in the past three years failed to attract reasonable deposits because of their high service charges. The trend has also negatively impacted on business and the local economy.

Currently, several financial institutions charge between US$1 and US$3 per transaction and monthly service charges.

However, during a symposium organised by the Affirmative Action Group (AAG) in collaboration with the Bankers' Association of Zimbabwe (BAZ), Reserve Bank of Zimbabwe (RBZ) Governor Dr Gideon Gono said this was an aberration he would address urgently.

He gave the banks two weeks to address the anomalies.

"Funds deposited into banks are supposed to appreciate rather than depreciate. I am against the charges being levied by banks on deposits and I am going to address the anomaly in the next 14 days," he said.

A recent survey commissioned by the Ministry of Finance revealed that 33 percent of the population does not save money due to limited banking products and high bank charges.

Dr Gono said the unfavourable service charges would be dealt with successfully. He is expected to address the issue in his monetary policy statement set to be announced next month.

"We are not going to destroy the existing structures but only improve them to meet our needs," he said.

"I have already dealt with the collateral challenges and the issue of interest and bank charges should not be a problem. There is need for banks to lower interest rates so that they promote indigenisation programmes."

Dr Gono also said the banking sector was using more funds to generate little profits because of its failure to create opportunities for small and medium-scale enterprises.

"As at December 31, the banking sector realised US$70 million profit and US$19 million of the money is attributable to foreign-owned banks.

"The banks used US$800 million in input costs to generate the profit, with more than US$200 million attributed to the participation of locals."

Official statistics indicate that more than 70 percent of Zimbabweans are employed in the informal sector.

It is also estimated that more than US$2 billion is circulating in this sector.

AAG national president Mr Keith Guzah also called on banks to do more to support SMEs, which, he said, were critical to economic growth.

"The banking sector is not realising the importance of SMEs. We have new banks in terms of ownership, but the mentality is still the same. Our hope is that the banks develop flexible lending strategies," he said.

"If banks do not create opportunities, programmes that support business and indigenisation exercises will struggle. We are not expecting to get money that is not accounted for. We are just pushing for the provision of programmes that we can participate in."

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