RBZ disputes $7.5 billion in informal sector

The Reserve Bank of Zimbabwe has disputed claims that an estimated $7,5 billion is circulating outside the formal banking system.

Reserve Bank of Zimbabwe director for bank supervision Norman Mataruka said it was impossible such a huge amount of money could be changing hands in the informal sector.

He said if $7,5 billion was outside the formal banking system, then where do those particular people do their shopping. He added that even RBZ Governor John Mangudya did not agree with the claims.

But Small to Medium Enterprises and Co-operative Development Permanent Secretary Evelyn Ndlovu said $7,5 billion was circulating in that sector.

Ndlovu said a study carried out with assistance of the World Bank had revealed that the informal sector was liquid.

Meanwhile, the Reserve Bank has been urged to come up with early warning systems to prevent banking sector distress, after a local research institution found out that the sector suffered three distress shocks between 2012 and 2014.

The Zimbabwe Economic Research Unit, in its Economic Barometer (Volume 15), said the Banking Sector Fragility Index shows that the financial sector has had three protracted periods of distress since June 2012.

The economic review study, largely focusing on developments in recent years, says that Zimbabwe's banking sector entered medium distress in June 2012.

ZEPARU said this phase of distress coincided with the closure Genesis Investment Bank and placement of Interfin Bank under curatorship on June 11, 2012. However, the sector had recovered from the shock by end of June.