(Last Updated on February 14, 2022 by zimdaily)
HARARE – Reserve Bank of Zimbabwe governor John Mangudya defended bank withdrawal limits announced on Monday last week, saying while there has been a groundswell of criticism, the new levels were above average formal sector salaries.
The central bank came under fire from trade unions and consumer lobby groups after announcing the new measures, with many saying the limits announced in the monetary policy statement (MPS) would amplify an already bad situation.
Mangudya set new mobile banking limits per transaction of $25 000 and $10 000 for person-to-business and person-to-person transactions, respectively.
Previously, the limits were $20 000 and $5 000, respectively.
Maximum limit for individual-to-business transactions was set at $100 000 per week while the person-to-person transfer limit was set at $70 000 per week.
Speaking at an event organised by the Zimbabwe Economic Society to review the MPS, the central bank chief said in arriving at the limits, the bank was informed by average salaries.
“We were of the view, and we are still convinced, that the figures which are there are quite high,” he said.
“If you look at the average salaries in Zimbabwe, they aren’t all that high,” he added.
“How many people are earning more than $50 000 or $60 000 in the general economy?
“They are not as many as you think they are. So, we looked at the general salaries in the market,” the governor said.
He said $100 000 equated to US$417, using a parallel market rate of US$1:$240.
But a salary of $50 000 or $60 000 translates to US$208 or US$250, respectively.
“I think if we are being very honest, the limits are quite good,” Mangudya said.
“You cannot compare these limits to inflation, you need to compare the people who are having the money in their accounts. But, be that as it may, I have taken note.
“These are live numbers so we can always adjust them as we go but for now, we thought we would see what happens,” he added.
He said the limits were also meant to limit foreign currency parallel market activities.
While the new limits were based on average salaries in the formal sector, about 60% of Zimbabwe’s economy is now in the informal sector, which is rarely considered in government planning.
The Zimbabwe congress of Trade Unions (ZCTU) said it was concerned that the new limits fell far below the rate of inflation.
The labour body said it was time employers considered paying salaries in foreign currency.
“The nominal increase, while welcome, is not adequate as the percentage increase is below the annual inflation rate, which implies that in real terms there was no increase,” Florence Taruvinga, the ZCTU president said.
“Exports and remittances have increased quite markedly over the period, 2020 to 2021 for instance, exports rose from US$3,7 billion in 2020 to US$6,2 billion in 2021, while remittances rose from US$1 billion in 2020 to US$1,4 billion in 2021.
“This provides a strong basis for the payment of US dollar salaries. Workers are suffering, they have ceased to have dignity,” she said.