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The Bankers Association of Zimbabwe (BAZ) has revealed that some regional and niche international financial institutions are beginning to cautiously re-engage with local banks, marking a potential turning point for the country’s financial sector following the lifting of US sanctions.
Zimbabwe had lost over 100 correspondent banking relationships in the past decade, largely due to international banks’ fears of attracting penalties from the United States Treasury Department. These fears stemmed from targeted sanctions imposed on Zimbabwe, which discouraged global institutions from doing business with local financial players.
However, the tide began to shift in March 2024, when the US Treasury Department’s Office of Foreign Assets Control officially terminated its financial sanctions regime against Zimbabwe. This followed a significant policy move by then US President Joe Biden, who signed an Executive Order revoking the national emergency designation and its associated sanctions. The decision has reopened critical re-engagement talks between Zimbabwean banks and their global counterparts.
“Zimbabwe had lost several correspondent relationships over the past decade due to compliance concerns and perceived reputational risks and country risk,” said BAZ president Sibongile Moyo. “However, some local banks still maintain correspondent banking relationships with US banks and some regional and niche international banks are beginning to cautiously re-engage. A few local banks have secured new correspondent relationships with smaller international banks in Asia, the Middle East and Africa.”
Correspondent banking relationships are essential for processing international transactions, facilitating trade, and providing financial services across borders. The loss of these relationships had severely limited the operational capacity of Zimbabwean banks on the global stage.
Moyo added that ongoing dialogue with development finance institutions was promising and focused on facilitating structured trade finance and guarantee arrangements to help restore confidence.
While challenges remain—particularly around Zimbabwe’s high public debt, which reached US$21.2 billion in 2023, or 96.6% of GDP—recent monetary policy statements from the Reserve Bank of Zimbabwe have emphasized stability and improved foreign exchange management. According to BAZ, this has created a more conducive environment for business, reassured foreign investors, and offered some comfort to international lenders.
“These include improving public debt statistics, implementing economic reforms aimed at fostering price, currency, and exchange rate stability, enhancing confidence, and ensuring compliance with Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) standards (leading to removal from the FATF grey list),” Moyo said.
The issue of unsustainable sovereign debt remains a major hurdle. The country’s external debt stands at US$12.2 billion, making access to traditional financing near impossible without bridge funding. At the African Development Bank’s annual meetings in Côte d’Ivoire last month, outgoing president Akinwumi Adesina revealed that Zimbabwe requires US$2.6 billion in bridge financing to pave the way for deeper financial re-engagement.
BAZ has thrown its support behind ongoing efforts by the government and the Reserve Bank to foster a stable banking environment capable of attracting foreign lines of credit.
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