Harare - ZIMBABWE is tightening the screws on financial institutions in the country – closing down two monetary companies and suspending one bank – as the government starts acting on President Emmerson Mnangagwa’s threats to punish businesses undermining the local currency through promoting dominant use of foreign currencies.
The Reserve Bank of Zimbabwe on Wednesday night suspended Metbank, closed down a popular mobile money service, Innbucks and halted bureau de change operations of Rolink Finance.
The monetary authority recently partially liberalised Zimbabwe’s exchange rate regime after allowing banks to negotiate exchange rates on a willing buyer/willing seller basis with their clients. But this has failed to provide some respite for the local unit of exchange and now central bank governor, John Mangudya is squeezing the screws on the financial services sector.
The Zim dollar has further lost value and was trading at $1:ZW320 on the streets of Harare compared to the official rate of $1:ZWL155. Economists and finance institutions such as the International Monetary Fund have advised Mnangagwa’s administration to address these exchange rate distortions.
“The Reserve Bank of Zimbabwe (the Bank) wishes to advise the public that it has, with immediate effect, suspended Metbank Limited from operating as an authorised dealer pending full investigations for breach of Exchange Control regulations relating to trading in foreign currency,” Mangudya said on Wednesday night.
As a consequence of this, Metbank “will not be permitted to deal in foreign currency, that is buying and selling foreign currency, and processing international and domestic foreign currency transactions” until further notice, said the central bank.
Media reports also show that senior management at Standard Chartered Zimbabwe, which has just announced that it is exiting Zimbabwe, is under probe for foreign currency dealings suspected to be in breach of exchange control regulations.
In addition to the suspension of Metbank, Zimbabwe’s apex bank also read the riot act to Innbucks, a mobile based money transfer service that allowed Zimbabweans to send and receive hard currency. It started off as a loyalty and rewards initiative by Simbisa Brands – the franchise operator of Nando’s, Steers and Chicken Inn.
Mangudya said Innbucks had failed to regularise its licensing requirements since November 2021. The service has gained popularity as an alternative to money transfer agencies and banks that levy higher charges.
Innbucks acknowledged that it was yet to finalise its licensing with the central bank as the monetary authority. In a joint statement, Innbucks and Simbisa Brands said: “An impasse has occurred in respect of which the Simbisa board is engaging the regulator.”
In its notice of suspension of Innbucks, the central bank of Zimbabwe highlighted that it had “ordered Simbisa Brands to cease operating the money transfer service branded or styled Innbucks with immediate effect”.
This means that “customers shall no longer be able to deposit funds into Innbucks account or transfer the funds” to others.
A third finance institution, Rolink Finance, which operated as a bureau de change, has also been suspended for “breaches of the Exchange Control” regulations.
“For the said exchange control violations, a penalty of US$120 000 or its equivalence in Zimbabwe dollar has been levied against Rolink Finance (Private) Limited.”
Mnangagwa recently warned that he would put in place measures to deal with local businesses deemed as undermining the local unit of exchange. This came as the rise in the street exchange rate has driven a wave of price increases in the past week.
“We are putting measures to make sure that we deal once and for all with companies that are manipulating the local currency. We are going to put measures that will ensure that our currency will be sought after and that the US dollar doesn’t dominate,” state media quoted Mnangagwa saying last week.
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