Zimbabwe foreign currency deposits shoot to US$1, 6 billion

Foreign currency deposits have surged to an impressive US$1.6 billion, largely attributed to growing confidence in the stability of the banking sector, as revealed by the Reserve Bank of Zimbabwe (RBZ).

During a recent presentation at the Zimbabwe Independent Banks and Banking Survey Dinner, Dr. John Mangudya, the Governor of RBZ, highlighted the substantial growth in total deposits within the banking sector.

"Confidence in the banking sector has significantly improved, as evidenced by the growth in foreign currency deposits, which have increased from around US$300 million in 2018 to a substantial US$1.6 billion as of the end of September 2023."

Dr. Mangudya noted the remarkable resilience and strong performance of the banking sector, with all banking institutions recording profits, despite challenges such as the COVID-19 pandemic. He emphasized that the performance indicators of the banking sector are favorable when compared to international benchmarks.

The central bank governor also commended the progress in financial inclusion, which stands at around 84%, attributing this achievement to digital financial services, particularly mobile banking.

"Approximately 95% of local currency transactions in the country are now conducted through electronic payment systems, with mobile transactions accounting for 80% of the total transaction volume, underscoring their significance in promoting financial inclusion. Electronic payments, including RTGS, account for 80% of the total value of transactions."

Furthermore, Dr. Mangudya highlighted the importance of the National Financial Inclusion Strategy II, launched in 2022, in promoting inclusive growth, employment, and poverty reduction, aligning with the government's commitment to leaving no one behind.

He elaborated on the measures in place to support the resilience and sustainability of the banking sector, including providing a lender of last resort facility for banking institutions and ensuring an efficient payment system with payment finality as the settlement hub.

Dr. Mangudya also emphasized various strategies employed to bolster the banking sector, such as risk-based supervision, anti-money laundering, climate risk management, cloud computing, and cybersecurity. Additionally, he mentioned initiatives in fintech and foreign currency trading through a wholesale foreign currency auction system to stimulate an active interbank foreign exchange market, along with RBZ's role in managing a national switch to facilitate interoperability in the financial sector.