Banking chaos over new currency; ZimSwitch, EcoCash services unavailable

By Bloomberg News

HARARE: Banking was disrupted across Zimbabwe as lenders rushed to convert all Zimbabwe dollar account balances to ZiG, announced by Reserve Bank Governor John Mushayavanhu as the new legal tender.

The ZiG, short for Zimbabwe gold, will be launched on Monday and is backed by a basket of foreign currency and gold — the latest attempt to staunch a slide in the nation’s currency.

ZimSwitch, the national payments platform provider, said processing of local dollar transactions across financial institutions is currently unavailable.

“Normal services will be restored once financial institutions have configured the new currency,” the company said in an emailed statement.

The local unit of South Africa’s Nedbank Ltd. is among the lenders which said late Friday its clients will experience “system downtime.”

“Our system is undergoing changes to accommodate the new ZiG currency over the weekend,” it said in a notice.

Ecocash Holdings Ltd., the African nation’s largest mobile money operator, said all its Zimbabwe dollar services were unavailable, while the biggest telecommunications operator, Econet Wireless Holding Ltd., has suspended trade in the old currency.

The central bank late Saturday said “satisfactory progress” has been made by the banking sector in converting balances in line with the monetary policy statement measures.

“The conversion process will continue for other economic sectors until Friday April 12,” Mushayavanhu said in an emailed statement. “Thereafter, the Reserve Bank expects that all the online payment platforms will be operating smoothly for all transactions in the economy.”

Although commanding a smaller share of commerce against the US dollar — which accounts for as much as 80% of all transactions — Zimbabwe’s old currency is still used to make electronic payments for basic goods in supermarkets and to pay for utility bills. Public servants also earn part of their pay in Zimbabwe dollars.

At least 27 financial institutions, including banks, mobile money operators and micro-finance lenders, are reconfiguring their systems, said Zabron Chilakalaka, chief executive officer at ZimSwitch.

“It’s basically a rebasing,” he said Saturday by phone. “Banks have to rebase the current balances. Some are able to do automatic conversions and others have to engage their vendors to assist.” US dollar-based transactions are still being processed, Chilakalaka said.

Zimbabwe’s previous currency reforms have seen lenders regularly reconfigure their systems. The most notable was during hyperinflation in 2008, when Zimbabwe was forced to dump its local unit in favour of the US dollar the following year.

The ZiG banknotes and coins will start circulating in the economy from April 30, according to Mushayavanhu. This is to allow the central bank to “undertake an intensive educational and awareness campaign” on the new currency, he said.