RBZ To 'Snoop' Into Individual, Business Accounts

HARARE – The Reserve Bank of Zimbabwe (RBZ) has moved to stop the illegal transfer of money out of the cash-strapped country and has put in place new measures to monitor accounts of individuals and businesses.

Presenting the Monetary Policy Statement in the capital on Thursday, RBZ governor, John Mangudya, said illicit financial flows (IFFs) were the country’s major leaks.

“The issue is not necessarily that too little money flows into Zimbabwe. Rather it is what consumers and businesses do with that money. Too often, it is spent on unproductive uses,” he said.

Mangudya said such funds usually left Zimbabwe without circulating in the economy.

“We are exporting liquidity. We, therefore, need a national ‘plugging the leakages approach’ to transform the economy. To plug the economy from IFFs, tax evasion, porous border posts, smuggling and non-repayment of loans. This needs high level of self-discipline and compliance to non-negotiable values of transparency and accountability,” Mangudya said.

The top banker said transparency and accountability in the use of scarce financial resources was pertinent to ensure money circulated within the economy for economic transformation.

The lender of last resort’s chief said the bank supported bona fide uses of money by both individuals and businesses.

“What we are very much against and deeply concerned about is the abuse of hard-earned financial resources through illicit financial flows (or capital flight), smuggling and misappropriation of bank loans,” Mangudya said.

“Remittance of dividends and profits, for example, is bona fide but the remittance of revenue is not at all bona fide. These nefarious activities are short-circuiting or draining the financial system and creating liquidity shortages. We cannot carry on like this as a country. We need to draw a line in the sand and never cross it. We need to go back to basics.”

Mangudya said developing prudential policy measures to deal with what he described as “shenanigans” was critical in addressing the major challenges facing the national economy such as unemployment, tight liquidity, lack of capital formation and lack of confidence.

The central bank boss also noted that donations, investments and account transfers saw the externalisation of US$684 million.

Non-performing loans (NPLs) also played their part, but the Zimbabwe Asset Management Corporation (Zamco) “cleansed” banks’ balance sheets through acquisitions and restructuring of NPLs such that as at December 31 2015 Zamco had acquired NPLs totalling US$357m from a number of banking institutions.

“The companies are in critical sectors of the economy such as mining, agro-processing and manufacturing. The restructuring involved extending loan repayment period, grace periods for capital repayments and reducing interest rates, and in some instances, converting debt to equity,” Mangudya said.

The central bank chief said the ratio on NPLs to total loans halved from a peak of 20,45 percent in September 2014 to 10,87 percent as at December 31 2015, adding the improvements were largely attributed to the disposal
of qualifying loans to Zamco.

Amendments to the Banking Act and the Reserve Bank Act, now awaiting presidential assent, would strengthen corporate governance and risk management within banking institutions, enhance the oversight role of the central bank, punish those who abuse depositors’ funds and empower the lender of last resort to take corrective action in problem bank resolution.

– Africa News Agency