Govt scrambles to restore shattered confidence

CLOUDINE MATOLA

The government is scrambling to restore shattered public confidence in a desperate bid to lure savings back from “under the mattress” and salvage the national economy.

This comes at a time when long-suffering depositors, infuriated by what they describe as local banks fleecing them with astronomical fees, are pulling billions from the formal system.

Consequently, the government has launched a campaign to restore confidence in the banking system, mandating the removal of all fees for accounts holding less than US$100 and for small point-of-sale transactions.

The move, confirmed in the National Development Strategy 2 (NDS2) policy blueprint running from 2026 to 2030, is a direct response to a crisis of “financial disintermediation,” where individuals and businesses are abandoning formal banking, choosing instead to hoard hard currency at home. This flight, officials warn, is starving the economy of the domestic investment pool needed to fuel growth.

“The lack of confidence in the formal financial services largely reflected the higher levels of bank and transactional charges which in some instances erode individual deposit holdings,” the NDS2 states. “This has had the effect of economic agents opting to hold hard currency surplus financial savings under mattresses.”

The strategy document outlines the prescribed cure: “The Reserve Bank is implementing banking sector policies and measures to ameliorate the problem of high bank charges. The measures include the requirement for banks to exempt from bank charges, all accounts that maintain a balance below US$100 or its equivalent in ZiG.”

Furthermore, all transactions under US$5 are to be free of charges. The central bank has also set mandatory minimum interest rates for deposits in a bid to make saving attractive again.

The policy is an admission of a system in peril. For years, depositors have watched helplessly as fees whittled down their balances, while banks, operating in an economy where major industries are “teetering on the verge of collapse,” have thrived, posting significant profits derived overwhelmingly from fees rather than lending.

The government’s frustration has boiled over into public criticism. Recently, George Guvamatanga, the permanent secretary in the Ministry of Finance, Economic Development and Investment Promotion, launched a blistering attack, accusing banks of treating customer accounts as rental properties.

“Banks are collecting rent from customers on a monthly basis,” Guvamatanga said. “They now say, you have an account where you pay me a rental of US$25 every month or US$20 every month.” He added: “Bank charges should encourage people to put their money into the bank.”

The new measures strike at the heart of a bitter public sentiment. A snap survey reveals depositors view the charges as a “bitter pill to swallow,” “exploitative,” and “detrimental to both deposits mobilisation and a fragile economic recovery process.” Interest rates on deposits have also been described as “pitiful.”

The NDS2 warns that the savings drought has material consequences: “This has material adverse effects on the available pool of domestic investable surpluses to underpin growth in the economy’s production capacity.” The strategy identifies cultivating a savings culture as “an essential ingredient to the deepening of the financial sector,” critical to weaning the economy off unsustainable external debt.