Depositors firm moves to boost ZW$ confidence; US$400k fund to compensate losing depositors – NewZimbabwe.com

By Alois Vinga

THE Deposit Protection Corporation (DPC) has moved to restore the Zim$ depositors who lost value when the economy de-dolarised in 2019 as part of efforts to address factors triggering confidence deficits on the local currency.

The policy directive was tabled in the 2019 National Budget Statement presented by Finance Minister Mthuli Ncube to the effect that small and vulnerable depositors who had balances of US$1,000 and below would receive compensation for the loss of value.

The development is also consistent with promises to resolve legacy issues which disadvantaged the banking public whose savings were eroded due to policy shifts.

To that effect, the DPC has moved to operationalise the compensation efforts through an arrangement targeting microfinance institutions for losses incurred due to the exchange rate movement from US$1: ZW$2,50 as at February 20 2019.

The initial phase has targeted microfinance institutions which include GetBucks Microfinance Bank, Empower Bank, African Century, Zimbabwe Women’s Bank, Lion Finance Zimbabwe and Success Microfinance Bank.

DPC public relations manager, Allen Musadziruma, Monday told NewZimbabwe.com Business that the initially targeted group of microfinance depositors will benefit from a US$400,000 fund availed through Kuvimba Mining House to the DPC.

“In other words, a depositor who had USD1,000 in his or her account would get USD600 (Six Hundred United States Dollars) being the total lost value.,” he said.

“The exercise to deposit-taking micro-finance banks has been closed and once we receive funds from the Ministry of Finance, we will advise on the payment modalities for the next beneficiaries of other banking institutions.”

Top economist, Doctor Prosper Chitambara hailed the initiative underscoring that it will go a long way to restore confidence.

“The initiatives give a guarantee to the banking public that they will receive compensation if any shocks affect the economy. Depending on the implementation, it has the potential to encourage members of the public to bank their foreign currency,” he said.

Meanwhile, Musadziruma said after compensating clients of deposit taking Microfinance Institutions, subsequent tranches for disbursement would be allocated to remaining deposit taking institutions namely commercial banks, building societies, savings banks as and when additional funds are availed.

“It will be more or less the same payment criteria but much will depend on how much is available to DPC and all these modalities will be communicated to the public,” he said.