The financial sector has been doing very well in recent memory in Zimbabwe. This was in part due to stringent lending practices, which drastically reduced delinquent loans and the bank's disproportionate investments in Treasury bonds and mortgages.
But there is one component that has propelled you into profits that you will not notice if you do not sit down to check your balance sheets. That is, bank charges or bank fees. These fees are charged for setting up and maintaining the account, and minor transactional services, etc. They include fees such as checking the balance of the account, charges for reactivating a bank account, charging for transferring money from one account to another in the same bank, etc. Even if the charges are clearly stated up front, that does not mean it's fair to charge. Some seem so insignificant (balance question), you can not help wondering if the bank is using them just to earn some extra money. But it is from these types of rates that banks in Zimbabwe are making huge profits.
What Zambia did
These charges are not only found in Zimbabwe, even the Zambians were being charged also before Zambia's central bank took on the responsibility of ensuring that customers were no longer stolen. The central bank of Zambia met with all financial institutions and asked them to justify 26 bank charges, which the banks were unable to persuade. So the central bank agreed one day to instruct all banks not to charge 26 types of bank fees. How is this for a central bank that is promoting financial inclusion? This is worth copying to Zimbabwe's Reserve Bank of Zimbabwe (RBZ), is not it? Download the document by the central bank of Zambia here.
Bank charges make no sense: a case for Zimbabwe
In fact, banks (from Zimbabwe) must pay us (by earning interest on our savings) instead of paying them (through the fees they charge us). Of course, the bank's role is to provide a safe place to keep our money and sometimes the opportunity to earn interest on our deposits. However, we are not earning interest by keeping our money in their vaults; instead, they charge us these weak charges.
What RBZ does not know is that it is hurting our banks because they depend on non-interest income (money generated by these bank fees) instead of generating interest income through loans to productive sectors. Indeed, Zimbabwe's banks seem to be losing their appetite for risk, in part because their revenues are sustained by non-interest income. Take a look where most of your loans and investments are going; treasury bills and home construction (for mortgages). No wonder the bank lending trajectory is on a downward trend at a time when companies desperately need working capital. Instruct banks to remove banks (many of them) so they can open up more ways to monetize or raise their loans, instead of living off our hard earned money by charging unsecured bank charges.
Reserve Bank of ZimbabweZimbabwe
The Zimbabwe Reserve Bank (RBZ) is the central bank of Zimbabwe. Its offices are located at number 80 on Samora Machel Avenue in Harare. The Reserve Bank of Zimbabwe operates under the Zimbabwe Reserve Bank Act, Chapter 22: 15 of 1964. The Act provides … Learn more about Reserve Bank of Zimbabwe
The Republic of Zimbabwe is a country located in the Southern Africa region. Its capital is: Harare and the country has 10 provinces. Zimbabwe has 390,580 km2 and is bordered on all sides by other countries (Zambia, in the north, South Africa, … Learn more about Zimbabwe