Zimbabwean banks face backlash over excessive charges

Zimbabwe's banking sector is celebrating strong financial results, with shareholders across financial institutions enjoying substantial dividend payouts following another profitable year. However, the celebrations have been tempered by growing criticism over the industry's increasing reliance on fees and charges, which have overtaken traditional lending as the main driver of bank revenue.

According to the Reserve Bank of Zimbabwe's (RBZ) 2025 Monetary Policy Statement, fees and charges accounted for 22 percent of total banking income in 2024, ranking second only to the revaluation of foreign currency assets, which contributed 34.42 percent. In stark contrast, income from loans and advances - historically the core function of banks - contributed just 13.14 percent.

Despite these troubling trends, local banks have been delivering handsome dividends to their shareholders. Pan-African lender Ecobank Zimbabwe has proposed a dividend of ZiG139.58 million, equivalent to US$4.39 million, for the year ended December 31, 2024. FBC Holdings also announced a final dividend of US$0.25 per share and ZiG 3.9 cents per share, in addition to an earlier interim dividend of the same amount paid out in October 2024. The dividend will be paid to shareholders by April 29, 2025, with shares trading cum-dividend until April 14.

CBZ Holdings, the country's largest financial services group, has proposed a final dividend of US$10 million or US$1.61 cents per share. It has pledged to announce specific record and settlement dates in due course. Meanwhile, the National Building Society (NBS) confirmed that it declared and paid an interim dividend of US$420,000 to its shareholder, the National Social Security Authority (NSSA). Similarly, POSB declared and paid a dividend of US$589,341 following its annual general meeting held in July 2024.

Banking expert Clifton Dube said these dividend declarations reflect the strength and resilience of Zimbabwe's banking sector, which has continued to post solid results despite ongoing economic volatility, currency shifts, and inflationary pressures. He said the adoption of digital platforms had improved efficiency and expanded access, while prudent cost management had allowed many banks to remain profitable.

However, the growing reliance on non-lending income has sparked widespread concern. Customers and financial commentators have criticised banks for excessive charges, including steep account maintenance fees, costly transaction charges, and high interest rates. These charges, many argue, are driving people away from formal banking channels and undermining confidence in the sector.

Economic commentator George Nhepera said the situation was a cause for serious concern. He noted that while the financial sector remains profitable and well-capitalised, the overreliance on bank charges is weakening the system's credibility. He compared the charges to a form of taxation that erodes both personal and corporate bank balances, discouraging individuals and businesses from using banks to manage their money.

Economist Alice Chikonzi also weighed in, warning that continued reliance on non-core banking activities such as commissions and transaction fees could hinder long-term economic development. She proposed a more balanced approach that encourages banks to resume their developmental role by supporting productive sectors of the economy, including agriculture, manufacturing, and small businesses. Chikonzi suggested that regulatory authorities could offer tax incentives, interest rate subsidies, or risk-sharing schemes to banks that prioritise lending to critical areas of the economy. She also said encouraging more fintech startups and smaller banks into the market could boost competition, leading to lower charges and better services for consumers.

In response to growing discontent, the Reserve Bank of Zimbabwe has taken steps to ease the burden on bank clients. The central bank recently instructed all banks to eliminate transaction charges on payments of US$5 and below or the equivalent in the new Zimbabwe Gold (ZiG) currency. It also ordered banks to increase interest on savings and time deposits as part of wider efforts to encourage people to return to the formal banking system and support the local currency.

Despite these measures, many remain skeptical. Critics say that while banks continue to deliver super profits and dividends to shareholders, the average Zimbabwean is being left behind, bearing the brunt of high service charges and limited financial product offerings.

As the debate continues, the spotlight remains firmly fixed on the country's financial institutions. While their financial statements boast strength and resilience, the real test lies in whether they can rebuild trust and reposition themselves as true facilitators of inclusive economic development.