Banks must enable civil servants and pensioners to spend their US dollar Covid-19 allowances in shops by ensuring they have foreign currency accounts and the required debit cards.
On their part, retailers must have point of sale (POS) machines that can transfer hard currency between nostro accounts.
The Ministry of Finance and Economic Development yesterday made it clear that bankers had to brief their customers on the new systems, and ensure that customers could spend their US dollars easily not just with a card but also using electronic platforms.
The ministry attacked those banks that have not yet put in place the systems and hardware that was agreed on, and instead are forcing their civil servant customers to liquidate their allowances in the bank, converting these allowances to local currency at the bankers’ buying rates.
Generally banks pay a little under the auction rate when buying, and a little over when selling, and also pick up a fee when making the conversion.
Retailers, on the other hand, usually offer to convert at the bankers’ buy rates, what they would have to pay their bankers, and pick up the fees themselves, since this is not only a sale, but one that feeds their own nostro account.
At better-organised supermarkets, it is now common to see a short queue of civil servants and civil service pensioners, lucky enough to be with a bank that has issued FCA cards, standing at the special till or desk and swiping for their purchases at what is probably the only FCA card machine.
Following an announcement in June by President Mnangagwa, that the Government was paying off its own bat, while negotiations on permanent pay settlements continue, a flat non-taxable Covid-19 allowance of US$75 a month to civil servants and US$30 a month to Government pensioners, the Government has made good on its pledge and transfers the money to the individual FCA accounts.
There was some delay, as more than 300 000 cards had to be made and issued, but the Government assumed a deal with all banks had been made, only to find that some banks were not living up to their promises.
Now the second batch of allowances is being processed, and the Finance Ministry wants action.
“Treasury is pleased to announce that it is today making a further release of the foreign currency to enable the payment of the US$75 Covid-19 allowance to civil servants as well as the monthly commitment to pensioners of US$30,” said yesterday’s statement.
“However, Treasury notes with concern and disappointment that some regulated banking institutions, in connivance with some major retailers, have conspired to limit or prevent beneficiaries of this scheme from accessing the full foreign currency value of their payments,” read part of the statement.
In the statement, the ministry also dismissed as bad practices by some banks that have not adequately communicated with civil servants and pensioners on the opening of Foreign Currency Accounts as they had agreed with the Reserve Bank of Zimbabwe, and this has left many beneficiaries in the dark about the existence of new bank accounts.
“Some banks have not made any serious and visible efforts to issue suitable cards and deploy relevant and adequate supporting points of transaction equipment to enable the beneficiaries to use the cards to make payments for goods and services using the foreign currency-denominated cards.
“Additionally, electronic platforms for transacting in the USD allowances are either absent or inadequate, or information about this is not available,” read the statement.
As a result of banks failure to provide FCA cards and platforms for transactions civil servants and pensioners are forced to liquidate their cushioning allowances, which is disenfranchising them.
“Government has taken exception to these behaviours, and especially in regard to the fact that in addressing the wage challenges faced across the civil service. Government needs the assistance and cooperation of players in the banking system, who have a duty and obligation to ensure that their actions or omissions do not impose negative shocks on the market.
“It is therefore desirous that working closely with the Reserve Bank of Zimbabwe, banks are strongly encouraged to urgently address the above concerns and immediately upgrade their domestic payments infrastructure as well as providing adequate internet and other banking platforms in light of the increased need for ‘translatability’ of the foreign currency allowances.
“Additionally, banks are encouraged
to immediately make available to the public, and more directly to their individual customers, information about the operation of the nostro accounts that have been operationalised for receiving the Covid-19 allowances. It is critical that the unhealthy information gaps and access issues that presently obtain are urgently addressed,” read the statement.
To guard against the potential misuse of the US-denominated cushion allowances, that come to a combined US$32 million per month for both civil servants and pensioners, the Government decided to secure the money through forms of FCA accounts.
Key considerations that the Government took include the market shocks implied in an increase on its wage bill from 30 percent of annual revenue to 40 percent, but which the Government in present circumstances can afford by adjusting its spending so it can handle the allowances without borrowing.