Zimbabweans stash $1 billion offshore

Zimbabweans stash $1 billion offshore
Published: 14 December 2017 (441 Views)
FUNDS held by Zimbabweans in offshore banks rose to US$1 billion last year, having declined to US$300 million four years ago, following escalating political risk and uncertainty at home, Reserve Bank of Zimbabwe (RBZ) deputy governor, Kupukile Mlambo, has disclosed.

This amount was exclusive of billions of United States dollars, now subject of a government ultimatum for repatriation, spirited into safe havens through foreign currency externalisation.

Mlambo, who reinforced the RBZ's warning that authorities must tackle the slide in confidence, said the funds held offshore by Zimbabweans reflected lack of confidence in the local economy.

Savings held by Zimbabweans in offshore banks were estimated at about US$800 million on dollarisation in 2009, the central bank deputy chief said.

During the period when the country's inflation rates dropped to less than one percent in 2009, from the record breaking levels of 500 billion percent in December 2008, Zimbabweans repatriated their savings back home after confidence had been restored by economic and political stability.

As a result, funds held in offshore accounts dropped to US$300 million in 2013, said Mlambo, noting that this was also in tandem with double digit economic growth achieved at the time.

He said by the end of last year, deposits in foreign accounts had crept back to about US$1 billion.

In his address to mining industry executives on Friday, Mlambo blamed mounting economic headwinds characterised by the banking sector fragility, as well as the painful liquidity crisis that has heightened fears of a return to the 2008 debilitating crisis.

"Everything comes down to confidence," Mlambo said in his comments at the launch of the 2017 State of the Mining Industry Survey report on Friday.

"If confidence returns on the market, foreign currency shortages will disappear. Bank queues worry us, but what we are facing is a shortage of foreign currency, not a shortage of cash. Our US dollar in Zimbabwe is (not) used for importing equipment, but it is also used for buying tomatoes on the roadside," he said.

"The amount of money held by Zimbabweans in foreign banks was about US$800 million in 2009. But by 2016, it had gone back to just under US$1billion. This was the time when we were beginning to have foreign currency shortages," he said.

The situation highlights the extent of the challenges that President Emmerson Mnangagwa's new administration faces.

The mining sector survey said while Mnangagwa's unexpected rise to power had helped calm market fears of a deteriorating economic and political crisis going into 2018, pockets of uncertainty remained.

The Chamber of Mines of Zimbabwe (CoMZ) called on the new administration to swiftly address risk factors to bolster the industry's recovery prospects.

Central bank authorities have refused to acknowledge that the banking system has been paralysed by lack of confidence.

But scenes of long queues at the doorsteps of every banking hall point to a deepening crisis.

Thousands of depositors, including pensioners, have had to sleep in banking queues countrywide to access their savings during a crisis that intensified at the end of 2016, and is also blamed on foreign currency externalisation.

Last year, the RBZ said about US$1,8 billion was being externalised every year, although other reports placed the figure at US$2,4 billion per annum.

Banking money offshore is equivalent to surrendering vital liquidity to the countries of recipient banks.

The US$700 million reported to have been moved offshore represents almost twice the US$392 million in fresh capital that the mining industry said it requires to stimulate exports and unlock the vital foreign currency to rebuild the economy.

Savings have virtually dried up and import cover which has deteriorated to perilous levels of less than a month was below the recommended three months, according to the International Monetary Fund.

This has placed the country at risk of failing to import vital requirements including fuel and medicine. Government has given individuals and organisations that have externalised foreign currency a three month window to return the funds or face prosecution.

But those who have not been able to open offshore accounts still prefer not to deposit their savings in banks but keep it at home.

This has fuelled the liquidity crisis, whose genesis can be traced to the 2007/2008 financial crisis.

When banks closed, savings were trapped inside, and people failed to access them.

- fingaz

Tags: RBZ, Forex, Mlambo,

You May Like These Videos


There are no comments.

Latest stories

Man breaks leg, arm in suicide bid

by Staff reporter | 22 October 2018 | 53 Views

Chiwenga threatens Chiwenga

by ZimLive | 22 October 2018 | 87 Views

RBZ captured by black market forex dealers, says Lumumba

by Staff reporter | 22 October 2018 | 60 Views

Mthuli Ncube's 2% tax court challenge dismissed

by Staff reporter | 22 October 2018 | 44 Views

Soldiers robbed

by Staff reporter | 22 October 2018 | 67 Views

P0rn stars not fit to be employed in govt offices - Ruhanya

by Stephen Jakes | 22 October 2018 | 67 Views

Wadyajena blasts Modi, Mthuli for indicating right while turning left

by Stephen Jakes | 22 October 2018 | 83 Views

MDC hijacked by dictators - Mpofu

by Stephen Jakes | 22 October 2018 | 60 Views

Chamisa 'Pfee' in fuel queue

by Stephen Jakes | 22 October 2018 | 59 Views

Of prophets-cum-political activists

by Nicole Hondo | 22 October 2018 | 37 Views

Mthuli Ncube should prioritise MDC MPs, says Mliswa

by Staff reporter | 22 October 2018 | 52 Views

Zifa complicit in Dembare disgrace!

by Staff reporter | 22 October 2018 | 53 Views

Minister voices concern over Lumumba appointment

by Staff reporter | 22 October 2018 | 51 Views

Birds of a feather, Mthuli Ncube flock with Lumumba?

by Staff reporter | 22 October 2018 | 42 Views

Political lessons from the village

by Anthony Mkondo | 22 October 2018 | 40 Views

PHOTOS: Black market cooking oil dealer in kombi crash

by Simbarashe Sithole | 22 October 2018 | 351 Views

Zimbabwean 'Ninja' honoured in Italy

by Agencies | 22 October 2018 | 114 Views

Mnangagwa's patience with Mangudya wearing thin

by Staff reporter | 22 October 2018 | 245 Views

Zimbabwe 'soldiers' invade shops, impose own prices

by newzimbabwe | 22 October 2018 | 254 Views

My question to Finance Minister - I smell a rat!

by Isaac Nkomah | 22 October 2018 | 176 Views

United Methodist Church embarks on clean-up campaign in Mvurwi

by Simbarashe Sithole | 22 October 2018 | 91 Views

Why Mnangagwa doesn't have the answers

by Robert Rotberg, Harvard University | 22 October 2018 | 171 Views

Luxury cars for ex-Mugabe loyalists

by Staff reporter | 22 October 2018 | 157 Views

Mnangagwa's Cabinet: The skeletons are tumbling

by Tawanda Majoni | 22 October 2018 | 192 Views

Guruve vendors denounce local council

by Simbarashe Sithole | 22 October 2018 | 95 Views

Chiwenga goes down memory lane

by Staff reporter | 22 October 2018 | 153 Views

Army calls for 'ceasefire' in machete attacks

by Staff reporter | 22 October 2018 | 128 Views

Zanu-PF to crack whip on errant members

by Staff reporter | 22 October 2018 | 93 Views

Zanu-PF, MDC Alliance to square off again

by Staff reporter | 22 October 2018 | 125 Views

'Stolen $90,000 belonged to Sandra Ndebele'

by staff reporter | 22 October 2018 | 130 Views

Mthuli Ncube defends RBZ

by Staff reporter | 22 October 2018 | 134 Views

Zimbabwe fuel usage up 100%?

by Staff reporter | 22 October 2018 | 84 Views

Man arrested over gun salute for dad

by Staff reporter | 22 October 2018 | 119 Views

Hookers descend on Beitbridge

by Staff reporter | 22 October 2018 | 95 Views