By Eben Mabunda
IN November 2018, Zimbabwean telecoms mogul Strive Masiyiwa joined the anti-sanctions lobby highlighting that no country could prosper with “its hands tied at the back”.
The impact of sanctions on the Zimbabwe financial services sector, directly or indirectly should never be underestimated as they serve to financially gatekeep Zimbabwe and to a certain degree, financially exclude Zimbabwe from the rest of the world.
Zimbabwe lags behind its neighbours in Foreign Direct Investment (FDI) Inflows. Between 2017-2019, South Africa, Mozambique and Zambia generated US$12,1 billion, US$7,2 billion and US$2,1 billion respectively while Zimbabwe attracted US$1,3 billion- ahead of Botswana’s US$800 million.
In 2016, the US through the Office of Foreign Assets Control (Ofac) fined Barclays Bank Plc US$2,5 million for violations of the Zimbabwe sanctions regulations. The transactions were for corporate customers of Barclays Bank of Zimbabwe Limited (now First Capital Bank), that were owned directly or indirectly, by a company on Ofac’s List of Specially Designated Nationals and Blocked Persons. In 2017, Ofac fined CBZ Bank, for financial transactions done on behalf of ZB Bank which was then under US sanctions. CBZ appealed against the measures, and was in 2020 cleared of a US$385 million penalty, with a stern warning issued.
In 2019, The Standard Chartered Bank Zimbabwe was fined US$18million after its UK-headquartered parent company was slapped with a US$1billion fine for violating US sanctions against Zimbabwe and other countries. Zimbabwe has over the years lost more than 60 correspondent banking relationships, making movement of funds and financial inter-mediation even more difficult.
Victor Mapunga an ICT entrepreneur and CEO of FlexFintx made history earlier this year as he championed FlexFintx to become the first ever Zimbabwean start-up to be recognised as part of the World Economic Forum Technology Pioneers list. In a recent exclusive with Mapunga on the sanctions debacle, he revealed:
“In the case of a country like Zimbabwe, sanctions make it far much more difficult for businesses and individuals to conduct international trade… In Zimbabwe’s case, because of the Ofac sanctions,we cannot engage in financial activities globally without facing the severe scrutiny of international watchdogs and monetary authorities which in turn make the cost of doing business in Zimbabwe very high.
“Very good examples, Zimbabwean businesses cannot access merchant accounts for platforms like Pay Pal which would make it easier for us to access foreign currency,” he said.
Mining is the mainstay of Zimbabwe’s economy with mineral exports accounting for approximately 65% of the nation’s exports over the past five years. However, the sector is buffeted by sanctions with several mining firms under sanctions including: the Minerals Marketing Corporation of Zimbabwe, the Zimbabwe Mining Development Corporation alongside Mbada Diamonds and Marange Resources. Of course this submission would be incomplete without mentioning how sanctions decimated a thriving horticultural sector which at one point was the second largest forex earner for Zimbabwe’s agriculture. With the imposition of European Union and United Kingdom sanctions, access to European markets were shaved, especially the UK market.
In 2014, ICT entrepreneur and Mandela Washington Fellowship recipient, Takunda Chingonzo in a ground-breaking interview held in front of dozens of African leaders, world business executives and the media at the US-Africa Business summit quizzed former US President Barack Obama over US sanctions on Zimbabwe.
I concede, as a nation we have governance issues that have in recent years impinged on our economic performance, which include policy inconsistency, escalated corruption and a lack of transparency among others- these must be solved urgently!
Elsewhere on the continent: in the DRC, Uganda, Eswathini and Nigeria, there are gross human right abuses but they arenot under such sanctions as we have, which allows their economies the necessary latitude to rebuild their economies. By the same token, Zimbabwe’s ailing economy must also be given the room to reconstruct its economy without the heavy burden of economic sanctions.
- Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — firstname.lastname@example.org