The Sunday News
Economic Focus with Gabriel Masvora
IN 2009, when the country officially started using multi-currencies, I was among those who advocated for the public to embrace banking although the wounds of hyperinflation era were still fresh among many people while some were still cursing the day they opened a bank account.
The banking sector was not doing enough to cleanse its dirty history. Although the country was using strong and stable currencies, banks still saw deposits and loans as their goldfields, milking the few dollars that come through their vaults leaving people still doubting if it was really necessary to trust these institutions.
The bank charges were and are still outrageous and it was always a hard call to sell the idea that the public must still entrust banks to look after their money.It was difficult because the results on the ground were always pointing to the contrary.
You deposit $100 today and think it will earn interest; well that is book economics and not in Zimbabwe.
In a month’s time the bank would have probably added 50 cents as interest but took almost $10 or even more as bank charges wrapped in all sorts of names.
The gap between interest on deposits and interest on loans was just out of this world and if this is not the last degree of madness, then I do not know the best way to describe it.
However, I was defending banking because in normal circumstances an economy cannot function without a banking sector.
We still need to trade, we still needed to borrow and banks could only offer such services when deposits are being made.
That is why I still then believed that despite this mismatch, the country still needed to embrace banking.
The bigger picture pointed to a banking sector finally re-adjusting its focus and realising that the only way to gain the trust of the people was also to come up with the right products which would bring back the confidence in banking.
But like the biblical Lucifer, bankers again saw themselves as being super powerful and instead continued their greedy attitude and killing the same goose which had continued to lay the eggs for them.
Because the bankers thought they knew it all, they started giving us the usual bookish explanations to justify their actions.
On loan interests, bankers wanted us to believe that they were also borrowing money from outside at high interest due to the perceived risks of the country. They have these high sounding terms, which they always use which most ordinary people rarely have an idea of. We could believe this but there was never a proper explanation from banks on why they were punishing a small time farmer or worker who deposit his money for safe keeping.
After entrusting the bank with the money, the bank will obviously use the money for its own benefit. However, after using your money the banks would punish you further by putting punitive charges on the deposits. This is cruelty at its best, to use someone’s resources and go on to charge him if he demands the resources back!
No one could offer an explanation why banks would charge you as much as $10 for withdrawing your money. Yes, your own money. Or even no one could explain why without doing any transaction, the next time you get to the bank, instead your balance would have gone down after some deductions.
Even after numerous calls from authorities to reduce the charges, the bankers simply put earplugs, smiled and moved away hand in pocket to continue the raids. To be honest, the local banking sector has not done anything since dollarisation which must guarantee its continued support and sympathy.
Over the last few weeks, because of the shortage of money, banks have been rubbing their palms smiling as this has presented themselves with another chance to continue their killing act. Since a few weeks ago, banks have started limiting the maximum cash withdrawals for individuals.
Although the Reserve Bank of Zimbabwe has capped daily maximum withdrawals at $1 000, banks have come with their own caps with some offering a paltry $200 per day. Suddenly queues, some last seen in 2008, have resurfaced at most of these banks. And mind you, as usual they have explanations for this saying there is shortage of money.
But do these banking institutions bother to consider the damage they are doing to the sector and economy in general. From the undertones coming out of these bank queues, I think what is happening now will finally erode even the faintest trust people still have in banking.
No one wants to be reminded of the sad past. This situation where people cannot access their money as and when they want to use it is ridiculous. On top of that, the same banks are punishing the depositors for failing to disburse enough money by punishing them for numerous withdrawals.
With the limits now, people are being forced to make numerous withdrawals and the result is that banks are busy charging for every transaction. Never mind the fact that this is not the problem of the depositor, banks have to benefit.
At $200 daily, someone needs five days to withdraw $1 000 and for every transaction, the bank charges them. In addition to that, at some banks, people are now spending hours in the queues. In the past this was once a one off transaction which did not even need 10 minutes at the bank.
Seriously how then do they convince people to bank when they are faced with such vulture-like attitudes by the banks?
Funny enough, there is this drive to use plastic money in transaction. To use plastic money you must have money in the account. How do you then encourage people to use the money when banking itself is scaring away people?
Do banks even consider the damage they are doing to the economy? Take for example a Grade Seven school teacher in the rural areas who is preparing his class for the final examinations this year. For him to access his pay he now needs three days to withdraw the money and probably two more for travelling from his school.
This means every month, that teacher needs a whole week away from the station to access his salary. In a term, it means that the same teacher will have to spend almost a month out of the three months away from school. No need to guess what will be the results of that.
Imagine the damage that would have done to the education sector, but thanks to our banks that does not matter.
Banks should give us a reason why a mechanic would bank the $100 he would have made today and when he wants to buy oil tomorrow, he will have to queue half a day to access that money.
There is that thinking that a lot of money is circulating in the informal sector and yes, it is true. But why would someone feel the urge to bank her tomato proceeds in a bank when tomorrow when she wants to replenish her market, she won’t be able to access the money.
Too often, the country has been accused of employing extraordinary measures to deal with economic situations.
While it might be not be official it seems the public has also joined in this innovative thinking.
We might encourage them to bank but the public has seen the mistrust and they have employed their own banking through clubs and even in pillows. To them it is better because they can access the money as and when they want it without charges or queues. Frankly, a simple study would show that those who are still running bank accounts are the few workers who were forced to open an account so they can access their salaries.
Maybe the RBZ must sit down with these banks and think deep if they still want to remain relevant to the ordinary people.
Why would people continue to support a sector when it cannot offer them a service they want and expect? The banking sector must refocus its mandate and play a pivotal role in the economy.
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