Zimbabwe’s banks suffer as cash dries up

Barclays announcing the sale of its Africa share has exacerbated the cash shortage problems in Zim. (Siphiwe Sibeko, Reuters)

Barclays announcing the sale of its Africa share has exacerbated the cash shortage problems in Zim. (Siphiwe Sibeko, Reuters)

Zimbabwean banks are showing signs of strife, and the news of Barclays selling down its share in Barclays Africa is exacerbating the situation.

ATMs and some banks are running out of cash, evidence that the finance sector is struggling despite assurances that the industry is sound.

Foreign banks in Zimbabwe have largely remained stable but their locally owned counterparts are struggling. And the foreign banks have always counted on their international parent companies for liquidity but there are signs of weakness.

The ATMs owned by Standard Chartered in Harare have broken down frequently over the past week. But the bank’s spokesperson, Lillian Hapanyengwi, said: “We can confirm that we have not been experiencing any ATM outages.”

The ATMs of another bank, CABS, in which Old Mutual is a significant investor, have also been running out of cash.

Anthony Mandiwanza, the chairperson of Barclays Zimbabwe, said the bank had a 45% liquidity ration, which was above the regulatory benchmark of 30%, and was able to “support its requirements”.

But an economist, John Robertson, said the banks are struggling for liquidity and the situation they find themselves in reflects the troubles the Zimbabwean economy is undergoing. Other financial fundis said the cash shortages have prompted the government to push for the adoption of the Chinese yuan.

“The economy is struggling and the sentiment on Zimbabwe among investors is worsening.

“The banks are struggling for liquidity and most are unable to effectively meet demand for cash,” Robertson said.

Executives at most banks said they are experiencing worsening cash shortages. Short-term deposits are failing to meet a growing demand for withdrawals, especially at month end.

Loans have also been scaled back, according to banking sector sources, despite pressure from the government for the banks to help farmers.

Central bank governor John Mangudya said last week that the banking industry was sound after a hoax social media message, allegedly from an “insider”, went viral, advising clients to withdraw their money from the NMB Bank because it was going to be placed under curatorship.

“Yes, there are cash shortages and it has started to worsen, but money is also being externalised and that is why the central bank is taking measures to stop that.

An official, who asked not to be named, said: “An economy that mostly imports is always going to have cash shortages, while sanctions have also affected the position of financiers and lenders.”

The Bankers’ Association of Zimbabwe president, Sam Malaba, said there was nothing unusual about what was happening in the banking industry, but banking industry sources say international financiers have grown tired of advancing lines of credit.

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