More than a third of Zimbabwe’s commercial banks are unable to honour all their customers’ cheques, threatening to cause gridlock in the Southern African nation’s already troubled financial sector, economists said on Wednesday.
For the past two weeks, six of the 16 institutions have been suspended from the daily clearing of interbank debt because they do not have the cash to pay other banks.
Some stores have issued lists of banks whose cheques they will no longer accept, independent economist John Robertson said.
”This was a crisis in the making for the past year,” he said.
Last year, the government kept maximum interest rates at a fifth of the official inflation rate, now running at 625% — one of the highest levels in the world.
Many Zimbabwean businessmen were borrowing money at cheap rates and buying forward in expectation of a quick profit as prices increase due to inflation, Robertson said.
They were investing in limousines, real estate, building materials and foreign currency. But a sudden drop in demand coupled with sharply rising interest rates at the end of last year left many unable to repay their loans, he said.
In a December 16 policy statement, Reserve Bank governor Gideon Gono said the institution would no longer intervene to keep interest rates down. Lending rates surged from below 100% to more than 500%.
”There are very real dangers of gridlock,” said Anthony Hawkings, an economics professor and leading banking consultant.
He said the amount of money owed by the affected banks to the 10 still trading was bound to increase, exacerbating liquidity difficulties and threatening the viability of some institutions.
Trust Bank, the largest of the six, said a Reserve Bank audit showed it was ”one of the most solvent financial institutions in Zimbabwe”.
”The only challenge is the liquidity situation that Trust is already addressing,” the bank said in a statement.
Officials at the other banks could not be reached for comment on Wednesday.
Information Minister Jonathan Moyo on Wednesday dismissed South African and British media reports that the banking crisis could trigger ”economic meltdown”, calling them ”the hallucinations of a wishful thinker”.
In an article in the state-run Herald newspaper, he said a slump in the black-market rates for foreign currency showed the economy was recovering. The United States dollar currently buys Z$4 500, down from about Z$6 000 last month. The official exchange rate is 824-1.
Moyo said a government clampdown on cross-border traders who buy comparatively cheap Zimbabwean goods for resale in neighbouring countries was behind the drop.
Analysts said the troubled banks and indebted businesses were selling hard currency and other assets to try to repay their loans, contributing to the drop in the unofficial exchange rate.
The six affected banks are all new institutions started by local businessmen.
The government has eased banking regulations in recent years to assist Zimbabweans — including one prominent ruling party politician — to open their own finance houses.
The government accuses international institutions like Standard Chartered Bank and Barclays Bank of profiteering and bias against local black entrepreneurs.
But most Zimbabweans still prefer banking with more established institutions.
Last week, the ENG Capital asset management group collapsed amid fraud allegations, and the central bank closed one of its subsidiaries, Century Discount House. Two ENG directors were arrested after the firm failed to pay more than Z$50-billion owed to investors.
Zimbabwe faces its worst economic crisis since independence from Britain in 1980, with acute shortages of food, gasoline, medicines and other essential imports.
Foreign loans, aid and investment have dried up since the often violent seizure of thousands of white-owned farms for redistribution to impoverished blacks plunged the country into political and economic turmoil. — Sapa-AP