Chaos erupts as Reserve Bank bans money transfer agencies

By Lance Guma
10 October 2006

Thousands of people countrywide were left stranded at post offices and banks around the country after being told they could not access money sent to them by relatives abroad. This happened a few hours after the Reserve Bank on Monday closed a total of 16 money transfer agencies with immediate effect, accusing them of abusing their licences by doing deals on the black market. Standard Chartered Bank, Stanbic Bank, CBZ Bank, Interfin and the Central Africa Building Society (CABS) were among high profile banks that had their money transfer licences withdrawn. Other agencies like Fredex, POSB, NMB Bank, TransAfik, Dollarway, Zimpost, I and F, Pacific, Banfords, Currency King and Parlovan suffered the same fate.

Simon Muchemwa in Harare reports that there was chaos at the Kopje Plaza post office branch in Harare as customers tried to get physical with clerks at the counter who were at pains to explain the result of the Reserve Bank’s decision. Customers with reference numbers and passwords to use for getting their money milled around the agencies not knowing what to do next. Central bank governor Gideon Gono accused the agencies of selling foreign currency sourced from Zimbabweans in the diaspora on the black market. He also warned that players in the financial sector risked losing their licences without notice if they continued to flout the rules. Analysts have blasted Gono’s decisions for not allowing sufficient time for a smooth transition.

Government’s own Homelink scheme for money transfers remains unaffected while a few unnamed commercial and merchant banks are said to have retained their licences. Experts say government is trying to bolster its failing Homelink scheme by shutting down the competition to create a monopoly for its own scheme. All those affected have been given up to 31st October to appeal. Gono said the Reserve Bank would consider reinstating some of the licences only, ‘on the basis of strict performance and delivery targets.’ A money transfer agent based in the United Kingdom said Gono’s measures would not affect them at all because they sold their forex to Zimbabwean companies that need to import raw materials and other items.

The central bank also announced other new measures which it says are meant to maintain discipline in the financial sector. Bank licences will now be reviewed annually and the governor threatened to punish those banks that did not improve their lending patterns to reflect a balance across key sectors of the economy. Gold producers also came under fire for selling to the black market. The central bank says it will ‘put in place a system of intricate precious minerals audits which will be conducted on site at each mine by well trained and experienced experts.’

The central bank has been accused of trying to treat the symptoms rather than the disease affecting Zimbabwe’s economy. Poor government policies and corruption are to blame, with the violent land grab increasing the country’s isolation from the international community and ensuring that the agriculturally based economy collapsed totally. An inflation rate of over 1200 percent stands out as emblem of how bad things really are. The government has shown over the years that it is more interested in preserving itself than in addressing the economic malaise it has created.