Zimbabwe’s Banking Sector Struggles Under International Sanctions

March 9, 2023
steward | Report Focus News

Zimbabwe continues to face economic challenges, with high inflation, currency shortages, and limited access to foreign currency. The country’s banking sector has been particularly affected, with limited access to international markets and a decline in foreign investment.

In an interview with Trevor Ncube last year, Lance Mambondiani, the CEO of Steward Bank, highlighted the impact of international sanctions on Zimbabwean banks. Mambondiani noted that the sanctions had made it difficult for Zimbabwean banks to access foreign currency and conduct international transactions, limiting their ability to expand their operations and provide services to customers. He emphasized the importance of innovation in driving the growth of the banking sector and suggested that new technologies and business models could help Zimbabwean banks overcome the challenges posed by the sanctions.

Since the time of the interview, the situation in Zimbabwe has remained challenging. The COVID-19 pandemic has further exacerbated these challenges, with the government implementing restrictions on movement and business activity to control the spread of the virus. The government’s plan to reintroduce the Zimbabwean dollar as the sole legal tender has been met with skepticism, given the country’s history of hyperinflation and currency instability.

International sanctions also continue to impact Zimbabwe’s economy, with restrictions on trade and financial transactions limiting the country’s access to international markets. The United States and European Union have both imposed targeted sanctions on individuals and entities in Zimbabwe over human rights abuses and violations of democratic principles.

In terms of the banking sector, the Reserve Bank of Zimbabwe has implemented measures to address the foreign currency shortage, including a foreign exchange auction system and restrictions on the use of foreign currency for local transactions. Despite these measures, the availability of foreign currency remains limited, and Zimbabwean banks continue to face challenges in accessing international markets and conducting transactions with foreign banks.

The impact of international sanctions on the banking sector and the economy as a whole continues to be a topic of debate. Some argue that the sanctions are a result of mismanagement and corruption by the Zimbabwean government, while others argue that they are necessary to address human rights abuses and violations of democratic principles. The resilience and adaptability of the banking sector in Zimbabwe will continue to be tested as the country navigates these challenging economic conditions.

Overall, Zimbabwe’s economic challenges are complex and multifaceted, and will require sustained effort and reform to address. The country’s banking sector will likely continue to face significant challenges in the near future, with limited access to foreign currency and international markets. However, as Mambondiani suggests, innovation and new technologies could help Zimbabwean banks overcome these challenges and drive growth in the sector.