- HARARE -- Meltdown of Zimbabwe's
economy passed a milestone yesterday when shops began refusing cheques
from six commercial banks teetering on the brink of insolvency.
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- Supermarkets in the capital, Harare, displayed notices
warning customers that no cheques would be accepted from some of the country's
best known banks.
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- One third of Zimbabwe's commercial banks have been blacklisted,
heralding the collapse of Harare's once sophisticated financial sector.
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- "We have an avalanche in progress, and there is
a known list of banks which have little stamina and so, for them, it will
be very destructive," said John Robertson, an independent economist.
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- The banks have fallen victim to hyperinflation and flagrantly
corrupt lending policies. Zimbabwe's real inflation rate exceeds 1,000
per cent yet the government has set interest rates at only 800 per cent,
forcing most banks to lend at a loss.
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- To make matters worse, many have chosen to favour President
Robert Mugabe's wealthy followers with unsecured loans at preferential
rates of interest.
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- The combination of negative real interest rates and bad
debts from supporters of the ruling Zanu-PF party has driven six of the
15 black-owned banks to the verge of insolvency.
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- Some are so short of cash that they have started offering
interest of 650 per cent for 10 day deposits. Few of these banks will have
the means to honour their promises.
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- Only foreign-owned institutions offer complete security.
Confidence remains high in Standard Chartered, which is British, and South
Africa's Stanbic bank. The names of the threatened banks cannot be disclosed
for fear of precipitating their collapse.
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- Zimbabwe's economic collapse has created countless money-spinning
opportunities for unscrupulous bankers with links to Mr Mugabe's regime.
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- At the official exchange rate, £1 is worth Zimbabwe
$815. On the black market, £1 buys Zimbabwe $7,000. Some banks have
bought hard currency from the Reserve Bank at the official rate and pocketed
huge profits by selling it on the black market.
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- Zimbabwe's economy is among the fastest-shrinking in
the world. Its collapse has assumed such proportions that unemployment
has risen to more than 70 per cent and half the population survives on
international food aid.
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- © Copyright of Telegraph Group Limited 2004.
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- http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2004/01/06/wzim06
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