Zimbabweans hold $1bn in offshore accounts

A Parliamentary organ on the national budget has raised concern over a spike in cash held by Zimbabweans in offshore bank accounts, which escalated to nearly $1 billion during the current half of the year.

In a first quarter report on the budget performance and outlook, the Parliament Budget Office said “the rapidly increasing stock of deposits held by Zimbabweans in Bank for International Settlements (BIS) reporting banks” was of concern.

The report indicated that cash held by Zimbabweans in foreign banks amounted to $821 million during the first quarter of 2009 when the country ditched its currency for a foreign currency regime to escape hyperinflation, but had declined to $373 million by the end of that year.

The deposits then averaged $325 million quarterly between 2010 and 2012 before taking an upward trajectory in 2013, an election year that resulted in the collapse of the inclusive government after the ruling ZANU-PF party romped to a landslide victory in July elections.

The inclusive government was largely responsible for stability and a tight monetary regime under which government spending was restricted to revenue inflows.

The foreign deposits, which touched a trough in the third quarter of 2012 at $299 million before marginally increasing to $302 million in the fourth quarter of the year, rose to $336 million at the beginning of 2013 and ended the year at $539 million.

The following year, deposits held by Zimbabweans in foreign banks sat at $608 million, and at $678 million by the end of 2015.

This year, the amount of deposits held by Zimbabweans in BIS reporting banks were at $706 million in the first quarter, before rocketing to $940 million during the second quarter which ends this month.

A banker said the majority of depositors with the offshore banks were Zimbabweans in the Diaspora, who may be expatriates, students or their dependents.

But he added that there was still “an element of Zimbabweans in Zimbabwe”.

There are an estimated four million Zimbabweans abroad.

“If you open an account in South Africa, England or the United States, for example, countries whose banks are members of the BIS will send returns based on the citizenship of the account holders so anyone whose citizenship is Zimbabwean will be captured as a Zimbabwean with a foreign bank account,” said the banker.

He said Parliament should be concerned with cash held by Zimbabweans in tax havens, which was “the real money”.

“It’s not what the BIS is reporting. Accounts which are used to hide cash do not even reflect the nationality of Zimbabweans. They are in Hong Kong, Singapore, Mauritius, Dubai, Switzerland and the Bahamas and are without Zimbabwean domicile. Real money will not sit in those BIS reported accounts,” he said.

He noted that government should create a conducive environment to ensure that it taps into the money held in offshore accounts by Zimbabweans to invest it locally.

He admitted that many Zimbabweans working in the DRC, Sierra Leonne, Afhghanistan, Angola, and many other countries had local bank accounts into which they deposited money since dollarisation of the economy in 2009.

But when the country started experiencing cash shortages and eventually introduced bond notes, these Zimbabweans had opened accounts in South Africa, Botswana and other countries that report to the BIS.

This could probably explain the spike in cash held in BIS reporting banks, he said. Financial Gazette