I am always telling people this, there was a time when banks paid you to deposit money. You would deposit money and it would earn interest. It wasn’t by much but it you left money in a bank account it would grow. Nowadays banks have gotten so used to charging their clients it’s hard to believe this was actually a thing. These days if you leave money in your account the bank will charge you and your balance goes down each month. Most banks offer zero deposit but that’s about to change.

The RBZ has just announced that banks will start giving people interest:

Account typeInterest on ZWL$ AccountsInterest on USD Accounts
Savings AccountsMinimum of 5% per annumMinimum of 1% per annum
Fixed Term DepositsMinimum of 10% per annumMinimum of 2.5% per annum

Why this will not work?

I am caught between laughing and anger here but the simple truth is that it’s unlikely this is going to result in a surge in deposits. Here is why:

  • Few people have savings and fixed term deposit accounts. Most banks don’t even bother to advertise these services. Most of us have current accounts and whatever pittance filters in each month goes towards expenses.
  • Not many people can afford to save anyway. Since 2017 more people have slipped below the poverty datum line and as a result people are finding it hard to survive-savings is just a foreign word to them.
  • Even those that can save are better served by looking for alternatives. The Zimbabwe Stock Exchange offers much better returns than this.. If you have no idea what to do just hold on to your USD.
  • Otherwise what the government is offering for USD is actually below the inflation rate! Your interest earnings will be wiped by inflation
  • You will also have the 2% tax to contend with. You actually end up paying more in taxes than what you get in interests!
  • The RBZ has a track record of bullying people and businesses whenever they deposit their money. How many times have we seen Statutory Instruments wipe out fortunes. Remember 2018 and 2019? One Statutory Instrument is all it takes and your USD deposit will be turned into RTGs at the “official rate”

I seriously doubt this new bait will work as the bank intends it to.