Zimbabwe bank charges too high - Survey

ZIMBABWE banks' charges and service fees exceed those in the region, a recent survey by Industrial Psychology Consultants (Pvt) Ltd shows. Recently, the Bankers' Association of Zimbabwe said  bank charges were comparable with others in the region. But IPC managing consultant Mr Memory Nguwi said compared with neighbouring South Africa, for instance, local bank fees were ridiculously high.

"Compared with South Africa, Zimbabwean banks fees are too high," he said.

"A random comparison of service fees with South African banks shows that service fees are very much on the high side. ABSA charges R3,85 per withdrawal with an additional charge of R1,10 per R100. Nedbank similarly charges R3,50 for withdrawals plus R1,20 per R100 withdrawn, and Standard Bank charges R3,90 per withdrawal plus an additional 1,17 percent of the value drawn. Capitec charges a flat rate of R4 and FNB charges R5,70 per R500.

"The same argument can be used on the cost of getting ATM cards (debit cards). In South Africa, Standard Bank charges R4, yet some Zimbabwean banks charge US$20 for the same service," he said.

The IPC survey showed that 7,4 percent of the respondents mentioned high bank charges and service fees as an aspect of their current bank service that they disliked.

"Customers are concerned about fees. The 7,4 percent statistic tells us that one in every 13 Zimbabwean banking customers is concerned about the service fees.

"Rightly so, bank fees average US$2 to US$5 for every withdrawal that is less than US$200. A person earning around US$200 per month, and making two withdrawals from the bank incurs bank charges amounting to 15 percent of the total deposit," he said.

The BAZ contends that the current interest rate and bank charges regime had been necessitated by current economic conditions as banks are not generating adequate interest income to cover their costs.

Although acknowledging that bank charges are high and interest rates low, the Reserve Bank of Zimbabwe is unlikely to push for a review of the charges and rates.

RBZ Governor Dr Gideon Gono in the Monetary Policy Statement last month said it would be compelling banks for full disclosure of their charges and interest rates.

"The RBZ in collaboration with the BAZ will be developing a standardised format of disclosure requirements for bank charges and interest rates.

"Banking institutions shall be required to publish their charges in the prescribed disclosure format on a quarterly basis, and a consolidated report of banking institutions shall be published on the Reserve Bank website on a quarterly basis.

"This would promote comparability and reduce information asymmetry," he said.

Low public confidence in the local banking sector has resulted in their customers (institutional or individual) depositing long-term funds.

As at mid-year, official figures showed that the major sources of bank deposits were services (26 percent), financial organisations and investments (13 percent), households (17 percent) and distribution (11 percent), however, it is clear that these core sources of deposits are highly transacting sectors, resulting in deposits remaining short-term and transitory.

"With very little interest (if any) accruing on deposits, no wonder bank deposits remain of a short- term nature and have not been increasing as desired," said Mr Nguwi.

Meanwhile, the IPC survey also shows that high charges are not customers' only concern with local financial institutions.

An analysis of the features customers dislike about their banks shows that more customers mentioned queues and crowds (20,8 percent), system unreliability (8,5 percent), slow response to queries (8,4 percent), generally poor customer service (7,9 percent) than they did high bank charges and service fees (7,4 percent).