Mishma Chakanyuka, Staff Writer 
THE Bankers Association of Zimbabwe says most local financial institutions are expected to opt to use an African gateway created at South African Bank, FNB and Afreximbank for international clearance.
The development comes as Zimbabwe has, over the years, been deserted by several correspondent banks.
According to the Reserve Bank of Zimbabwe (RBZ), the country has lost an estimated 102 correspondent banking relationships over the last decade owing to the country’s high-risk profile.
Correspondent banks provide services to other banks, usually in a foreign country, acting as an intermediary, facilitating wire transfers, conducting business transactions, accepting deposits and gathering documents on behalf of another bank.
In a recent interview, BAZ president Lawrence Nyazema told The Financial Gazette that an African gateway has been created at FNB in South Africa, of which Zimbabwe is one of the pioneers.
The banking sector’s asset mix as at June 30, 2023. Source: RBZ
“There is an arrangement between City Bank in the States, FNB in South Africa, the Office of Foreign Assets Control (Ofac), the World Bank, the International Monetary Fund to say, in as much as we talk about a global village, how global is it when emerging nations are falling to clear for their international transactions,” he said.
“Banks across Africa, when working effectively and efficiently, can clear through FNB, and Afreximbank. I believe more Zimbabwean banks are going to be using those two platforms to do their international clearances,” he said.
Zimbabwe currently has two banks that are clearing for it in the United States, namely City Bank and Standard Chartered Bank.
“We are all going through third parties, but what I like about the FNB arrangement is that it’s an open one where you are not hiding from any of the players,” Nyazema said.
Last year saw the removal of Zimbabwe from the Financial Action Task Force’s (FATF) grey watchlist, which was expected to boost local institutions’ chances of securing new correspondent banking relationships. Zimbabwe was placed on the list in 2019, following an evaluation process that identified a number of deficiencies in the country’s anti-money laundering standards.
FATF said significant progress has been made in addressing the strategic anti-money laundering or combating of financing terrorism deficiencies previously identified.
Meanwhile, during the half year to June 30, 2023, foreign currency-denominated loans constituted 94 percent of local banks’ aggregate lending according to the central bank.
This reflects the apex bank’s deliberate squeeze on Zim dollar liquidity, which was meant to curb currency volatility and has been accomplished through high interest rates, open-market operations, as well as relatively higher statutory reserves.
In Zim dollar terms, the banking sector’s aggregate loans and advances were up eight-fold during the period to $10,19 trillion, as the domestic unit lost ground against major currencies.
The total loans to deposit ratio for the banking sector remained relatively stable at 55 percent from 55,67 percent at the end of 2022.
The same ratio for foreign currency loans was 60 percent.
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