Zimbabwe loses support of 50 international banks in past decade

RBZ Governor John Mangudya

ZIMBABWE has lost the support of 50 international banks in the past decade due to Western sanctions, central bank governor John Mangudya has said.

With now only three international banks availing credit to it, Zimbabwe is starved of foreign finance to develop its stuttering economy, Mangudya said.

The international financial institutions provided services such as wire transfers, business transactions, accepted deposits and gathered documents on behalf of local banks, Mangudya said.

“Zimbabwe is a very isolated country. We only have about two or three banks throughout the whole world than can finance us.

“The rest see Zimbabwe as a high-risk country, as a result our access to foreign currency is so minimal,” the governor was quoted as saying by state-run news agency New Ziana.

He said the country’s current economic challenges were emanating from the Western sanctions.

Zimbabwe adopted multiple foreign currencies in 2009 after its currency had been rendered worthless by a decade of hyperinflation.

However, the country is struggling to keep the multi-currency system in place as it does not have access to direct support from multilateral and other international financial institutions.

Out of the nine currencies in the multiple currency basket, the U.S. dollar has become the dominant currency but it is now in short supply due to low exports and externalization, according to the government.

Local bond notes introduced by the central bank last November have failed to tame a cash shortage gripping the economy.

Mangudya said the cash shortages can only be addressed by solving the country’s fiscal deficit, trade deficit, consumptive spending and market indiscipline.

He added that Zimbabwe prematurely dollarized in 2009 before putting correct fundamentals in place.

“If it was in the context of building, we were supposed to have what is called a special foundation. We should not have opened up the economy the way we did,” Mangudya said.