THE government will soon crack the whip on banks it is suspecting to be withholding foreign currency and cash instead of injecting it in the mainstream economy, a top government official has revealed.
This comes after the Emmerson Mnangagwa administration last month descended on Zimbabwe’s largest telecom company, Econet Wireless, by banning some of its mobile money transfers platforms, while at the same time suspending trades on the ZSE as part of efforts to stop what it termed nefarious activities meant to undermine economic reform efforts.
As the government wrestles against the economic tide, a government official said they will now act against banks as they try to formalize the economy.
“After what you have witnessed in other sectors of the economy, the government now targets the banks because we think they are not doing enough. Look, they have foreign currency which they are not putting into the mainstream banking system.
“For all we know this country has so much foreign currency, but it is stashed somewhere for speculative purposes. It is the man and women in those large offices who are holding on to cash for speculative purposes while the masses suffer.
“We want banks that are holding on to cash to inject it into the mainstream economy including foreign currency so that our economy functions again,” the official said.
Banks appetite to lend has been waning since 2015 seen through the declining Loan to Deposit Ratio which has fallen from a high of 86,07% in 2015 before tumbling to 56,64% in 2016. In December 2017 it took a nosedive to 44,81%, before plunging to 40,71% in December 2018. Last year it further dropped 36,6%.
However Bankers Association of Zimbabwe president Ralph Watungwa said that it was impossible for banks to stash away cash. “Banks are regulated by the Reserve Bank of Zimbabwe, which has strict reporting requirements.”
In a state of the nation address on Tuesday morning, President Mnangagwa blamed the opposition and foreign countries for derailing the economic prosperity of the country.
“The dark forces inside and outside our borders have thrived too long. We will defeat and overcome problems facing the economy,” said Mnangagwa.
His opponents blame the decaying economy on corruption after some government officials, ministers and people believed to be close to Mnangagwa have been fingered in graft scandals. Former Health minister Obadiah Moyo was fired from government after he was fingered in a drugs scandal. He was arrested and is out on bail.
The advent of the Covid-19 pandemic has also exposed the Mnangagwa administration as it battles mutiny from health workers who are demanding better working and living conditions as well as salaries.
To date Zimbabwe has seen 80 people dying from the virus, while 4 075 cases have been confirmed in the country. A total of 692 000 people have died as a result of the virus.