Zimbabweans abandon banks after Gono’s disastrous policies

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Zimbabweans have little trust in the local banking sector as they continue to keep money away from banks as memories of them losing their money during several currency changes are still fresh.

Barclays Bank Zimbabwe managing director George Guvamatanga has told an investment conference that “… we still have an issue of trust because people lost their money during several currency changes, and so they are not going to the banks,”

In addition, uncertainty shrouding the country’s political future, despite the formation of a power-sharing government between President Robert Mugabe and Prime Minister Morgan Tsvangirai, continued to hamper the financial sector and business at large.

Scores of Zimbabweans lost confidence in the financial sector after a protracted period of hyperinflation the nation experienced that rendered savings in interest bearing assets useless.

Several and arbitrary currency changes introduced by central bank governor Gideon Gono in a desperate and unsuccessful bid to stem inflation saw thousands of people losing their cash held at banks.

Banking figures indicate that banks held $475 million in deposits at the end of May while an estimated $600-$1,000 million cash was circulating outside the banking system.

Guvamatanga said that while the adoption of multiple foreign currencies had eased inflation of 230 million percent a year ago, banks were still struggling to attract savings and offer loans.

In January, Harare lifted a ban on the use of foreign currency to stem hyperinflation that had rendered the Zimbabwe dollar almost worthless.

Inflation, once described by Mugabe as Zimbabwe’s number one enemy,
had come to symbolise a dramatic economic and humanitarian crisis also seen in acute shortages of food and basic commodities, amid a cholera epidemic that infected nearly 100 000 people and killed more than 4 000 others.

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