Zimbabwe: Banks continue to fold up, sector no longer safe

zimbabwe-allied-bankZimbabwe’s banking sector seems to be crumbling as local banks continue to head out of business. The trend has been continuing for the past couple of years thereby putting pressure on the Reserve Bank of Zimbabwe (RBZ) to protect depositors from shaky banks. Authorities have often maintained that the banking sector is safe.

The latest bank to close its doors is Allied Bank after it gave up its operation license to the Central Bank on Thursday. The Central Bank confirmed the “voluntary surrender of the license by the banking institution.” The bank was among the seven banks that were having their stability closely evaluated by the Central Bank in 2014. Local banks such as Interfin and Genesis folded in the past two years.

The Central Bank has finally announced that “the Reserve Bank has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalized and is facing chronic liquidity challenges.” Some of the banks are finding it difficult to meet daily demand for cash from their customers.

International banks operating in the country such as Barclays, Standard Chartered, MBCA and Stanbic are still enjoying stability. However, President Robert Mugabe has been stressing that they should hand over majority of their shares to black Zimbabwean groups. Mugabe has been famous for his black empowerment policy which has forced the whites to flee the country especially the farmers. Some of the country’s citizens are white.

Before the implementation of the policy, Zimbabwe had a strong and vibrant economy.

About Geraldine Boechat 2761 Articles
Senior Editor for Medafrica Times and former journalist for Swiss National Television. former NGO team leader in Burundi and Somalia