Zimbabwe on Tuesday shut down its main money transfer agencies handling hard currency, mostly sent home by Zimbabweans abroad, after the state central bank accused them of trading irregularities.
The Reserve Bank alleged at least 16 agencies, including Western Union, helped in the diversion of hard currency into the thriving currency black market.
Officials at Western Union, one of the biggest transfer agencies with branches across the country, said business was suspended on Tuesday to await clarification from the central bank and prepare an audit and appeal.
An estimated 3,5-million Zimbabweans live and work abroad, driven away by economic collapse and political repression. Many have shied away from sending money through traditional banks and the central bank’s own facility, known as Homelink, where they receive the official exchange rate of Z$250 to a single $1.
In informal transfers, often through agencies or other third parties, and illegal black market deals the $1 fetches up to Z$1 200.
Central bank governor Gideon Gono said in a statement that money could still be sent through commercial and merchant banks and Homelink.
Gono said the transfer agencies whose licenses were suspended on Monday have until October 31 to appeal, proving they met ”strict performance and delivery targets”.
The measure, which caught businesses by surprise, was part of continuing efforts in monetary reform to curb record inflation of more than 1 200%, spurred by black market deals in scarce goods and block leakage of hard currency that should go into state coffers that pay out at the official exchange rate, Gono said.
He also announced all banking institutions will, from immediate effect, be required to renew banking licences every year under strict central bank scrutiny.
In the past, banks held permanent licences the could be withdrawn on evidence of misconduct.
Under recent regulations, banks were ordered to monitor large movements of money and confirm large sums came from legal sources and were accounted for in the financial and taxation system.
Gono said bank licences were to be renewed on their ”compliance record, discipline and uprightness in observing the country’s laws”, including anti-money laundering measures.
Critics of Gono’s policies accuse him of spying on routine business and private transactions and imposing regulations that could further stifle entrepreneurs already working in difficult economic conditions.
In a desperate bid to restore order to the Southern African nation’s chaotic finances, the central bank in August slashed three zeros from the Zimbabwe currency and issued a new range of bills that largely stopped large bundles and bags of old notes being needed for small and basic purchases.
Most computer and data management systems were also on the verge of collapse because they could not handle all the digits in the old money.
Zimbabwe is suffering its worst economic crisis since independence, with soaring unemployment and acute shortages of food, hard currency, gasoline and essential imports.
Government critics blame the crisis on chronic overspending during the 1990s and a breakdown in property rights, culminating in the seizure of more than 5 000 white-owned commercial farms for redistribution to black Zimbabweans since 2000 that disrupted the agriculture-based economy.
Evictions of the last remaining white farmers continue despite official reports that much of the seized farmland that was once among the most productive has been vandalised and left derelict in Zimbabwe, once a regional breadbasket. — Sapa-AP