Carte Blanche with Perry

Image Credit - Waldo Swiegers To be absolutely clear, there is a banking sector crisis unfolding in Zimbabwe. The chief catalyst of the current crisis that is likely to see some banks fold, is the country’s long standing currency conundrum. The wider use of the Zimbabwe dollar ushered in through Statutory Instrument 142/2019, has left banks technically insolvent. The jaw dropping, and seemingly outsized profits being posted by banks should not, and cannot mask this reality. They are for all intents and purposes, only paper profits, driven in part by the highly inflationary environment, where inflation levels are at their highest in over a decade, fair value adjustments and exchange gains. These (non-monetary) profits and the oft glossy commentaries that accompany them in the financial statements of banks, featuring a lot of high-sounding, but meaningless crackle of “resilience”, “enhanced focus on digitalisation”, “cost containment” and “mission focus”, cannot make up for t...

Reuters/ Philimon Bulawayo On 1 February 2009, Zimbabwe’s government buckled and gave in to the economic realities that had characterized the economy for much of 2007-08. On this day, the Zimbabwe dollar as we had come to know it, was no more. The economy adopted a multi-currency system which used a basket of about nine currencies, with the US dollar being the predominant currency. Then 10 years later, on 24 June 2019 to be exact, the government of Zimbabwe finally officialised a plan that had been in motion since April 2016, when through the RBZ, it initially announced the use of Bond Notes, alongside the multi-currency system. Through Statutory Instrument 142/2019, the government of Zimbabwe announced that the United States dollar and all other foreign currencies, were no longer legal tender in Zimbabwe. Effectively, the Zimbabwe dollar had bounced back from obscurity. And until recently, even in spite of resistance from the market, with the Zimbabwe dollar continuous...