Opinion / Columnist
It's not bond notes, but bank charges
03 Jun 2016 at 06:32hrs | Views
ZIMBABWE's banking sector this week came under withering attack for very old sins which financial institutions have benefited from with near absolute impunity while insulating themselves from critical public scrutiny by playing political victim and pretending to be sympathetic to the plight of long suffering depositors, or to appreciate why Zimbabweans are not too keen to keep their money in the banks.
What in part triggered the attack was not exactly the banks.
It was the shortage of bank notes in a country where everyone wants to be a mini-bank dispensing cash whenever they make a purchase.
Bank notes have lately proved to be elusive and members of the public have had to spend inordinate hours queueing outside banks to get their money.
Apparently the banks don't have it, and they must explain why.
It turns out the reason banks don't have cash go beyond the unctuous excuses about politics or the Reserve Bank of Zimbabwe (RBZ) raiding private accounts.
Economists tell us money, and in Zimbabwe's case money means chiefly American dollars; so American dollars come from exports, diaspora remittances, foreign aid or loans and foreign direct investment.
Roughly exports are put at just over $3 billion, diaspora remittances $1,8 billion, FDI close to $500 million.
I don't know about loans and foreign aid since that petty fight with the IMF and the more substantive and enduring one with Europe and the US over the land reform and indigenisation.
We are a dollarised economy. We have completely abandoned our own currency.
That means we all must lay a claim to whatever money comes in from outside by whatever channel, in the form of salaries and wages, or goods and services we sell to make a living.
Once it is earned, everyone is free to do with it as they please, and that is where ordinarily a responsible banking system should kick in.
In Zimbabwe that system is irresponsible and bankers deserve some of the flak they got this week.
When we were growing up we were told and learnt that the safest place to keep your money was the bank.
The banks did not only keep your money safe, they grew it over time.
They allowed you to save from as little as $5. (It was our own currency then.)
That is how it became fashionable for the poorest members of society to open at least two banks accounts: a deposit account for PUPS and a withdrawal account for daily use.
How we loved to carry the little green POSB book, or the red one from Beverly Building Society or the gold one from CABS!
They were both a status symbol and a form of insurance.
They showed one was a responsible person. We treasured them.
But the major reason we kept our money in the banks beyond the fear of thieves was in both accounts it earned interest.
There was an incentive. We were not wise in the intricacies of other investment instruments such as NCDs, shares or unit trusts.
The banks themselves made seductive offers of interest gains.
The same with endowment policies. Never mind that there were minor discomforts about inflation.
The language didn't make much difference. But banks came out as loving, caring, and as friends of the depositors.
The bank books allowed us to keep track of our deposits.
The monthly updates, especially if one had a stop-order facility, allowed one to see one's money grow like a tree, showing interest earnings to make colleagues envious.
In short, we viewed banks as partners in our wellbeing now and in future because non-withdrawal deposits meant we were saving towards a home or the education of our children.
That romantic relationship with banks is gone in Zimbabwe.
Blame it on Esap, Black Friday or 2008 and its record inflation. Partly true, but that's only convenient.
Zimbabwe adopted the multi-currency regime on February 29, 2009.
That ended the rage of inflation as we had just experienced it. We all settled to a predictable rhythm. We have become American.
Our economists will not hear talk of a Zimbabwe currency by whatever name. Such talk is subversive.
And they are so cocksure that once you dollarise it is about impossible to get out.
They will readily reel out the examples of Argentina, Panama, Ecuador, etc. (They are experts at researching for sources of negative sentiment and perception to back up textbook theoretical impossibilities but their think tanks go blank when most needed to invent practical solutions to challenges at hand besides blaming everything on politics.)
The question is: given the difficulty involved in reverting to the Zimbabwe currency and the stability of the US dollar, why have banks refused to revert to the earlier era when they were the friends of ordinary people and wanted to keep our money for us, almost seven years since we found the anti-inflation Holy Grail — the inflexible, unprintable American dollar?
Why have banks become the enemy of the depositor, leading in part to the current run on bank notes?
Enemy, yes. I don't have a more charitable description for the relationship between banks and potential depositors now.
Don't blame it on bond notes. That's too opportunistic. Fortunately the bankers themselves gave us the answer earlier this week.
It's the bank charges, stupid. Former Reserve Bank governor Gideon Gono failed to get banks to reduce bank charges. Tendai Biti as Finance Minister tried, and left without making a dent.
An instance: Two weeks before Reserve Bank governor John Mangudya announced the much maligned bond notes, I set forth in search of cash at a commercial bank at Sam Levy's Village in Borrowdale.
Their ATM wasn't dispensing money. So I got into the banking hall and I was thrilled to realise I was the only client.
It was about 9am, and Mangudya had just announced the previous evening that individuals could withdraw up to $1,000, which I didn't have.
Tobacco farmers could get as much as $10,000, being newly corporates.
Imagine my shock when I was informed by a teller at the counter I could withdraw only $50! Not wanting to make a scene, I took it.
On checking my balance outside, it showed I had been ripped off $4 for that transaction. "We charge 2 percent of the amount withdrawn," the teller told me.
Another commercial bank charges me $5 every month just for hosting my account; they call it a service charge, for a technology that must have paid itself up 10 times over by now! The Shylocks.
You see, banks are a capitalist contrivance. We deposit our little money.
They mobilise it into a lumpsum and use it for big investments to make big money in the form of loans.
They share with us the profit in the form of a token interest on our deposit.
That little bribe was enough for us back in the day to move around with pride, the green POSB book, red Beverly book or the gold CABS bank book showing in the pocket.
Unfortunately in Zimbabwe we have the half-baked capitalist who wants to chew the little goose which lays the golden egg.
We don't earn interest on our deposit, they actual eat the deposit itself until you are owing yourself without borrowing.
The Shylocks. They are not satisfied with the usurious interest they earn from loans but must strangle the poor.
In the end people refuse to deposit their money in the banks.
The same banks then shed miserly crocodile tears about lack of a savings culture in Zimbabwe, hence the high cost of borrowing.
So, self-righteously, they justify how they can't lend to the productive sector; on and on and on, until the bare lie shoots forth from their forked tongue that it's all because of indigenisation and their eternal grief for the irredeemable loss of the white man.
Meanwhile, the disillusioned potential bank depositor, burnt once, decides he will keep his cash under pillow until the pile is big enough for him to import a second hand vehicle from Japan.
Money which banks could have used to finance production but for a dark, devious political agenda.
What next, when moral suasion is met with calculating utter bad faith even as our economists tell us a market economy is best? Should government just fold its arms in the face of this naked sabotage?
What in part triggered the attack was not exactly the banks.
It was the shortage of bank notes in a country where everyone wants to be a mini-bank dispensing cash whenever they make a purchase.
Bank notes have lately proved to be elusive and members of the public have had to spend inordinate hours queueing outside banks to get their money.
Apparently the banks don't have it, and they must explain why.
It turns out the reason banks don't have cash go beyond the unctuous excuses about politics or the Reserve Bank of Zimbabwe (RBZ) raiding private accounts.
Economists tell us money, and in Zimbabwe's case money means chiefly American dollars; so American dollars come from exports, diaspora remittances, foreign aid or loans and foreign direct investment.
Roughly exports are put at just over $3 billion, diaspora remittances $1,8 billion, FDI close to $500 million.
I don't know about loans and foreign aid since that petty fight with the IMF and the more substantive and enduring one with Europe and the US over the land reform and indigenisation.
We are a dollarised economy. We have completely abandoned our own currency.
That means we all must lay a claim to whatever money comes in from outside by whatever channel, in the form of salaries and wages, or goods and services we sell to make a living.
Once it is earned, everyone is free to do with it as they please, and that is where ordinarily a responsible banking system should kick in.
In Zimbabwe that system is irresponsible and bankers deserve some of the flak they got this week.
When we were growing up we were told and learnt that the safest place to keep your money was the bank.
The banks did not only keep your money safe, they grew it over time.
They allowed you to save from as little as $5. (It was our own currency then.)
That is how it became fashionable for the poorest members of society to open at least two banks accounts: a deposit account for PUPS and a withdrawal account for daily use.
How we loved to carry the little green POSB book, or the red one from Beverly Building Society or the gold one from CABS!
They were both a status symbol and a form of insurance.
They showed one was a responsible person. We treasured them.
But the major reason we kept our money in the banks beyond the fear of thieves was in both accounts it earned interest.
There was an incentive. We were not wise in the intricacies of other investment instruments such as NCDs, shares or unit trusts.
The banks themselves made seductive offers of interest gains.
The same with endowment policies. Never mind that there were minor discomforts about inflation.
The language didn't make much difference. But banks came out as loving, caring, and as friends of the depositors.
The bank books allowed us to keep track of our deposits.
The monthly updates, especially if one had a stop-order facility, allowed one to see one's money grow like a tree, showing interest earnings to make colleagues envious.
In short, we viewed banks as partners in our wellbeing now and in future because non-withdrawal deposits meant we were saving towards a home or the education of our children.
That romantic relationship with banks is gone in Zimbabwe.
Blame it on Esap, Black Friday or 2008 and its record inflation. Partly true, but that's only convenient.
Zimbabwe adopted the multi-currency regime on February 29, 2009.
That ended the rage of inflation as we had just experienced it. We all settled to a predictable rhythm. We have become American.
Our economists will not hear talk of a Zimbabwe currency by whatever name. Such talk is subversive.
And they are so cocksure that once you dollarise it is about impossible to get out.
They will readily reel out the examples of Argentina, Panama, Ecuador, etc. (They are experts at researching for sources of negative sentiment and perception to back up textbook theoretical impossibilities but their think tanks go blank when most needed to invent practical solutions to challenges at hand besides blaming everything on politics.)
The question is: given the difficulty involved in reverting to the Zimbabwe currency and the stability of the US dollar, why have banks refused to revert to the earlier era when they were the friends of ordinary people and wanted to keep our money for us, almost seven years since we found the anti-inflation Holy Grail — the inflexible, unprintable American dollar?
Why have banks become the enemy of the depositor, leading in part to the current run on bank notes?
Enemy, yes. I don't have a more charitable description for the relationship between banks and potential depositors now.
Don't blame it on bond notes. That's too opportunistic. Fortunately the bankers themselves gave us the answer earlier this week.
It's the bank charges, stupid. Former Reserve Bank governor Gideon Gono failed to get banks to reduce bank charges. Tendai Biti as Finance Minister tried, and left without making a dent.
An instance: Two weeks before Reserve Bank governor John Mangudya announced the much maligned bond notes, I set forth in search of cash at a commercial bank at Sam Levy's Village in Borrowdale.
Their ATM wasn't dispensing money. So I got into the banking hall and I was thrilled to realise I was the only client.
It was about 9am, and Mangudya had just announced the previous evening that individuals could withdraw up to $1,000, which I didn't have.
Tobacco farmers could get as much as $10,000, being newly corporates.
Imagine my shock when I was informed by a teller at the counter I could withdraw only $50! Not wanting to make a scene, I took it.
On checking my balance outside, it showed I had been ripped off $4 for that transaction. "We charge 2 percent of the amount withdrawn," the teller told me.
Another commercial bank charges me $5 every month just for hosting my account; they call it a service charge, for a technology that must have paid itself up 10 times over by now! The Shylocks.
You see, banks are a capitalist contrivance. We deposit our little money.
They mobilise it into a lumpsum and use it for big investments to make big money in the form of loans.
They share with us the profit in the form of a token interest on our deposit.
That little bribe was enough for us back in the day to move around with pride, the green POSB book, red Beverly book or the gold CABS bank book showing in the pocket.
Unfortunately in Zimbabwe we have the half-baked capitalist who wants to chew the little goose which lays the golden egg.
We don't earn interest on our deposit, they actual eat the deposit itself until you are owing yourself without borrowing.
The Shylocks. They are not satisfied with the usurious interest they earn from loans but must strangle the poor.
In the end people refuse to deposit their money in the banks.
The same banks then shed miserly crocodile tears about lack of a savings culture in Zimbabwe, hence the high cost of borrowing.
So, self-righteously, they justify how they can't lend to the productive sector; on and on and on, until the bare lie shoots forth from their forked tongue that it's all because of indigenisation and their eternal grief for the irredeemable loss of the white man.
Meanwhile, the disillusioned potential bank depositor, burnt once, decides he will keep his cash under pillow until the pile is big enough for him to import a second hand vehicle from Japan.
Money which banks could have used to finance production but for a dark, devious political agenda.
What next, when moral suasion is met with calculating utter bad faith even as our economists tell us a market economy is best? Should government just fold its arms in the face of this naked sabotage?
Source - chronicle
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