Outrage in Zimbabwe as banks “garnish” millions from US dollar accounts

In a move that has sparked widespread outrage, Zimbabwean banks have begun deducting millions of US dollars from clients’ accounts, citing the Intermediated Money Transfer Tax (IMTT) introduced by Finance Minister Mthuli Ncube in 2020.

Clients of banks such as CBZ Holdings and Nedbank Zimbabwe have reported waking up to find thousands of US dollars missing from their accounts without prior warning or clear communication from the banks.

Nedbank Zimbabwe, in a notice dated April 25, 2024, informed clients that they had commenced a “manual recovery exercise” to comply with the Finance Act No. 8 of 2020, which introduced the IMTT.

The notice stated: “Subsequent to an earlier Notice on the collection of Intermediated Money Transfer Tax (IMTT), in line with the Finance Act No. 8 of 2020, which was effective 1st of August 2020, stating that the transfer of funds from a nostro foreign currency account is subject to IMTT, we advise that we have. commenced the manual recovery exercise retrospectively, to comply with the Act.”

The notice went on to explain that clients who were not charged IMTT on MasterCard transactions from August 1, 2020, would be affected.

“For transactions up to the 31st of May 2023, an IMTT of 2% will be applied, and for those after the 1st of June 2023, an IMTT of 1% will be applied,” the bank said.

Clients have, however, expressed outrage at the lack of transparency and accountability from the banks. “I just received text messages telling me how a significant amount of money had been debited from my account,” said one client, who wished to remain anonymous.

“I wasn’t warned about the deductions, and now I’m facing an overdraft.”

United Kingdom based Zimbabwean economist Chenayi Mutambasere, who holds an Msc in Development Economics and Policy, argues that the government is desperate and out of resources, leading to a clandestine attempt to claw back tax and create reserves through a retrospective IMTT on US$ accounts.

She adds that this move is criminal, as due process has not been followed, and it infringes on property rights.

“As I have stated, it is clear that the treasury has run out of resources since last year Zimbabwe has had a current account deficit. During elections, we saw a lot of fiscal indiscipline of loans and cars being given to chiefs, judges, MPs and so on.

“Clearly, this is a desperate attempt to clandestinely clawback tax and create some reserves. This is indeed criminal as clearly due process has not been followed. This is an infringement of property rights and should have followed consultation.

“It is becoming increasingly difficult for anyone to place any trust in this government. Investors will continue to fight this economy, which is going to further exacerbate the crisis,” she said.