No Interest, Just Interesting Charges

Financial inclusion efforts clash with realities of high transaction costs…

By Shingirai Vambe

Zimbabwe’s banking sector, once regarded as a pillar of financial security and savings mobilisation, has increasingly become a source of frustration for ordinary citizens, with many now questioning its relevance in a fragile and largely informal economy.

For millions of Zimbabweans, the concept of a bank account has shifted from being a safe place to store value to merely a transactional conduit, a passage through which money briefly flows before it is withdrawn, often immediately. Instead of encouraging a savings culture, the system has, over time, evolved into what many perceive as a mechanism for extracting charges and taxes from already strained incomes.

At the centre of this transformation is a broader economic reality shaped by years of currency instability, policy shifts and declining public trust in financial institutions. In practice, bank accounts have become almost mandatory for those in formal employment, primarily to facilitate salary payments. Beyond that, their utility appears limited, with high transaction costs and service charges discouraging long-term deposits.

Businesses, particularly those operating within formal structures, maintain accounts largely out of necessity, to receive payments from government and corporate entities. However, a significant portion of economic activity now occurs outside the banking system, with cash transactions dominating the marketplace. In what has become a defining feature of Zimbabwe’s informalized economy, many traders and entrepreneurs rely on what is colloquially referred to as “the bank under the pillow.”

This parallel cash economy has grown exponentially, with millions of United States dollars reportedly circulating outside formal financial channels. The phenomenon has been amplified by high-profile displays of cash wealth, including widely circulated social media videos of controversial businessman Wicknell Chivayo, who is frequently seen distributing large sums of physical US dollar cash, a reflection of both liquidity in the informal sector and declining confidence in banks.

Notably, the Minister of Finance, Mthuli Ncube, has publicly stated that there is no legal prohibition against holding large amounts of cash, further underscoring the normalisation of cash-based transactions in the economy.

Yet, while citizens grapple with low incomes and economic uncertainty, the formal banking system continues to impose a range of transaction and service charges, often perceived as disproportionately high. Critics argue that the government, through its tax collection mechanisms and regulatory instruments, has effectively turned the banking system into an extension of revenue collection, targeting the same limited pool of formally employed and compliant taxpayers.

This dynamic has created a paradox. While the majority struggle to maintain meaningful balances in their accounts, banks continue to report strong profits. The question that naturally arises is, where are these profits coming from, in an economy where savings are minimal and borrowing is constrained?

Access to credit remains a major challenge. Loans are often prohibitively expensive, with stringent requirements that exclude many potential borrowers. In response, microfinance institutions, some operating on the fringes of regulation, have stepped in to fill the gap, though often at steep interest rates. In some cases, these entities are linked to politically connected individuals, raising further concerns about inequality and access to capital.

The erosion of banking culture in Zimbabwe is deeply rooted in historical experiences, particularly the loss of savings value during periods of hyperinflation and currency reforms post-2000. Even today, many workers withdraw their salaries in full as soon as they are deposited, fearing both transaction costs and potential value erosion.

It is against this backdrop that The Post On Sunday engaged the Reserve Bank of Zimbabwe Governor, John Mushayavanhu, seeking clarity on the growing concerns around bank charges, profitability and financial inclusion.

Responding to concerns over high and sometimes opaque charges, the Governor indicated that the central bank, through its Banking Supervision, Surveillance and Financial Stability Division, is actively monitoring institutions to ensure compliance with regulatory frameworks, including the Banking Act and Consumer Protection Framework. He emphasised that banks are required to maintain transparency, publish their charges regularly and implement complaint-handling mechanisms for aggrieved customers.

On the issue of profitability, Mushayavanhu maintained that bank earnings are largely reflective of improved business models, sound governance and increased lending to productive sectors such as agriculture, manufacturing and distribution. He noted that interest income has grown significantly, rising from 13.47 percent of total income in 2024 to 34.65 percent in 2025.

However, he acknowledged concerns over the reliance on fees and charges, stressing that the Reserve Bank is closely monitoring the “source and quality of earnings” within the sector to ensure sustainability and fairness.

To promote a savings culture, the central bank has introduced minimum interest rates on deposits, currently set at 7.5 percent for ZiG accounts and 4 percent for US dollar deposits, alongside measures to reduce banking costs. These include the removal of cash deposit fees and balance inquiry charges, as well as exemptions for low-value accounts and transactions.

Despite these interventions, public scepticism remains high. Many Zimbabweans argue that the returns on deposits are still too low to justify keeping money in banks, particularly when weighed against the cumulative impact of charges.

The Governor, however, insists that efforts to restore confidence are underway, pointing to increased financial stability, improved exchange rate predictability and the introduction of the Zimbabwe Gold (ZiG) currency as key milestones in rebuilding trust.

Meanwhile, enforcement mechanisms remain in place for non-compliant institutions, ranging from monetary penalties to licence cancellation. The Reserve Bank has also ruled out standardising bank charges, arguing that such a move would amount to price controls, instead advocating for a regulated free-market approach.

In a further development, the People’s Own Savings Bank (POSB) confirmed to The Post On Sunday that adjustments to bank charges, in line with regulatory directives, are expected to take effect from April 1, 2026, a move that could signal a shift towards more affordable banking services.

Contacted for a comment on bank charges which appeared to be on the high, of, ZWG $625.00 the bank would deduct ZWG$48 per transaction, an amount close to equivalent US $2.00. The bank, POSB said, they had a fee of US$1.50 as minimum withdrawal charge, then account service fees, monthly charges to mention just a few.

The broader question lingers, can Zimbabwe rebuild a banking culture in an economy where trust has been repeatedly eroded?

As the country navigates its complex financial landscape, the answer may lie not only in policy reforms, but in restoring confidence among citizens, ensuring that banks once again serve as custodians of value, rather than mere conduits for transactions.

The informal economy, fueled by cash, resilience and necessity, continues to thrive beyond the reach of formal financial systems.

Mushayavanhu has previously urged banks to reduce reliance on fee income and refocus on lending. His 2025 Monetary Policy Statement revealed that fees accounted for 22 percent of banks’ income, while lending contributed only 13.46 percent.

Economist Gift Mugano said banks had drifted from their core business of lending and were using charges to offset low credit activity. “Banks are no longer involved in their core business, which is to lend money. In the circumstances, they have resorted to high bank charges to compensate for low lending levels,” he said.

Known banker, Nigel Chanakira, described the charges as “excessively high and burdensome,” warning that banks were damaging their own competitiveness.

“Regrettably, the banks are taking advantage of the inelastic demand for their service, in the long run, this strategy will compromise their competitiveness,” he argued.

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