Zimbabwean banks shunned by frustrated savers

by Richard Kilner

Story link: Zimbabwean banks shunned by frustrated savers

Zimbabwe’s financial catastrophe continues unabated.

Since October last year banks have frequently been running out of bank notes and the country’s extreme inflation rate continues to spiral out of control.

Cash barons guilty of hoarding vast quantities of Zimbabwean currency are to blame, according to the central bank chief Gideon Gono.

Gono also believes that there are simply too many banks for an economy the size of Zimbabwe’s.

Currently there are four building societies, five merchant banks and 14 commercial banks.

Three new denominations have been introduced recently but have had no impact on the enormously long queues regularly seen outside banks and cashpoints.

Zimbabwean consumers are becoming ever more frustrated with the queues, which can take days to reach the front of.

In some cases, individuals have waited for days only to discover that the cash machine or bank has run out of money.

Increasing numbers of people are now promising never to use banks again, so infuriating and time-consuming is the difficulty of accessing their own money.

The chief economist of the Zimbabwe Congress, Godfrey Kanyenze, has stated that there is simply no good incentive for anyone to deposit money with a bank.

Zimbabwe’s banks are set to see huge withdrawals accompanied by decreasing deposits.

However, this is not the first time that Zimbabwe has experienced such a problem. For several months in 2003 a similar situation occurred, during which the central bank issued temporary bearer cheques (currency denominations of a limited timespan) to help ease the crisis.

Zimbabwe’s official inflation rate is 8,000%, but experts say that the actual figure could be as much as 50,000%.

In addition, unemployment is running at 80% and supplies of essentials such as sugar are running low.