The shocking truth about how Zimbabwean Nostro accounts have been running critically low, is the only reason why we are in such a financial mess , but unfortunately the RBZ Governor Mr John Mangudya and Finance Minister Patrick Chinamasa are skirting the real problem.
Trying to blame externalization and bringing in of bond notes are only make up solutions to the ugly frog, while at on ground, what we really expect are long term solutions to solve the problem.
Zimbabwe does not just need the incoming bond note or export incentives to come out of the critical situation, but maybe to start off, Zimbabwe needs the truth. What happened to our real currency that we have been depositing into the bank accounts.
Currently, the nostro position of the banking sector is $250m and cannot support the Real Time Gross Settlement (RTGS) position of $1 billion, which required atleast around $450m.
Presenting his mid-term monetary policy statement, the RBZ governor John Mangudya came up with measures set to enhance confidence and production in the economy.
“In order to deal with the current delays in the processing of outgoing foreign payments by banks, the [central] bank has managed to secure facilities in an amount of $215m from international finance institutions . . . In addition, negotiations are at an advanced stage to raise $330m from regional sources to enhance production and improve the liquidity situation in the country,” he said.
I think this is the explanation that the nation needs first, before trying to fix the problem. Where did our nostro balance diminished to in the first place, they owe us an explanation so we wont worry about the repeat of such a move.
For those who do not understand how the Nostro Accounts system work, here is my simple explanation in a lay man’s term.
Zimbabwe banks including the RBZ do not control the US dollar, every currency that that has been in use came through international sources, so this currency like in any other international market is settled only through an international bank account called nostro account.
For every withdrawal made or deposit in any local bank, the corresponding international nostro account should be immediately adjusted likewise, as this is the actual account which holds the foreign currency.
Unfortunately in 2012, the RBZ took over the system, and promised banks that it will manage and settle the nostro accounts directly as the authority, and the banks had no option but to trust the regulator and submitted their banking system to RBZ which runs the local currency called RTGS, to enable intra bank transfers.
The then RBZ governor, Gideon Gono stated correspondent banking relationships could be vulnerable to money laundering and terrorism financing if not monitored.
However, what then became of the arrangement saw the RTGS bank balance grow in deposits, yet the actual nostro account continued to diminish, creating a serious imbalance.
The other irony is on the so called national importing priority list, why is that the RBZ defines who imports what and what volumes, is this their mandate, if we truly have real money in our local RTGS system, why are we not easily settling this with international payments.
Zimbabwean banks have traditionally been holding US dollar-denominated nostro accounts with US banks and in other jurisdictions like Germany and South Africa. These accounts facilitate the smooth flow of money in and out of the Zimbabwean financial system through facilitating outward payments (MT103s) or inward receipts (MT202s).
A report by one analysis Mr Mawarie cited
In 2014 South African banks, mainly Absa and FNB, instructed most Zimbabwean banks that were holding US dollar-denominated nostro accounts with them of their decision to close the accounts. They cited US Anti-Money Laundering and Organisation of Foreign Assets Control (Ofac) guidelines in their decision to close the accounts.
Most of the affected banks switched to Germany banks like Commerzbank which were more lenient and not very thorough with their requirements and minimum Know Your Customer (KYC) guidelines.
But Commerzbank has now communicated to Zimbabwean banks (by telephone) informing them of the decision to close down all US dollar-denominated accounts held with them. They have not pronounced the reasons behind their actions and the affected banks are, namely, POSB, NMB and Ecobank, among others.
This is why we are in a mess and we need a proper explanation from the two man if at all we are to trust them and their new systems. We cant build the nation o mistrust and time for honesty otherwise all these efforts are going down the drain and are mere time wasters.