Zimbabwe’s banking system is linked to international banks which allows for the transfer of U.S. dollar payments. Following the tightening of reporting standards in the United States to curtail money laundering and terrorist financing, most international banks severed their relationships with Zimbabwean banks, making foreign payments difficult. However, U.S. firms can still use five local banks that still have correspondent banking relationships with U.S. banks. Standard Chartered and FBC Bank have direct correspondent banking relationships with a U.S. bank, while Stanbic, Ecobank, and Nedbank can make payments through their foreign ownership structures.
Following the collapse of the Zimbabwean dollar in 2021, many companies in Zimbabwe found their cash reserves suddenly worthless. In addition, following the RBZ’s increase in rates in June 2022, banks in Zimbabwe charge relatively high interest rates of over 150 percent. The physical payment system functions well, but buyers may not have adequate financial resources to pay for goods acquired. Some local banks and vendors accept international credit cards as a form of payment for goods and services due to the use of a dual currency and the country’s desire to raise foreign exchange.
Zimbabwe’s high mobile telephone penetration rate of 90 percent has encouraged banks to partner with mobile network operators to offer a range of financial services including purchasing goods and services using mobile money. Zimbabweans now perform 96 percent of their transactions using a mobile device. The widespread adoption of mobile money has helped offset the negative effects of a shortage of cash which retailers prefer.
Banking Systems
Zimbabwe has a well-developed banking sector modeled on the British system. The RBZ is the central bank which, following years of dollarization, is once again responsible for monetary policy with the reintroduction of the local currency, the Zimbabwe dollar, in 2019. The government allows the U.S. dollar to be used for all domestic transactions to facilitate economic activity.
The rest of the banking system is composed of commercial banks, which are the largest subsector; merchant banks, whose function is to finance trade, underwrite rights offerings of listed companies, and assist in mergers and acquisitions; building societies, which provide mortgages for real estate transactions; the People’s Own Savings Bank, a government-owned bank; development financial institutions; and micro-finance institutions. Other key players in Zimbabwe’s financial sector include insurance companies, pension and provident funds, investment trusts, and offshore portfolio investors. The re-introduction and collapse of the Zimbabwe dollar has challenged balance sheets for many banks, particularly when U.S. dollar assets were converted into local currency balances, while U.S. dollar liabilities remained.
Foreign Exchange Controls
The RBZ has some controls on current and capital account transactions. The RBZ established a foreign exchange priority list to guide banks in the distribution of foreign currency at the preferential interbank exchange rate. The RBZ uses this priority list in allotting money to successful bidders in its foreign currency auction system. RBZ limits the U.S. dollar cash clients can take out of the country to $10,000.
U.S. Banks and Local Correspondent Banks
U.S. banks do not have a presence in Zimbabwe, although some banks with foreign ownership such as First Capital Bank (formerly Barclays Bank of Zimbabwe Limited), Standard Chartered Bank Zimbabwe Limited, Stanbic Bank Limited, Ecobank, and Nedbank Zimbabwe (formerly MBCA bank) do have some correspondent banking relationships with U.S. banks.
In March 2022, the Financial Action Task Force (FATF) removed Zimbabwe from the “grey list” of countries considered not to be in full compliance of Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) standards. Several international banks had cut off correspondent relationships with Zimbabwean banks as part of their de-risking strategy. Except for Standard Chartered and FBC Bank, Zimbabwean banks no longer have direct correspondent banking relationships with the United States. Stanbic, Ecobank and Nedbank have indirect correspondent banking relationships through their foreign ownership structures. Standard Chartered Bank announced in April 2022 its intention to exit the Zimbabwean market as well as four other countries on the continent.
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at https://www.trade.gov/trade-finance-guide-quick-reference-us-exporters.
For additional information, visit the U.S. Department of State Investment Climate Statements.