In the latest desperate act to shore up the flailing Zimbabwean dollar the Reserve Bank of Zimbabwe’s Financial Intelligence Unit has written to all banks ordering them to limit ZIPIT transactions to $20 000 ZWL per day. The latter begins by essentially saying ZIPIT is being used by illegal foreign currency traders and it’s limits are too generous.

Temporary Downward Review of ZIPIT Limits to ZW$20,000 per Day and ZW$100,000 per Month

The FIU has noted that the existing ZIPIT transaction limits which have no monthly cap are being misused, primarily for illicit foreign currency transactions.
The current ZIPIT limits of ZW$100,000 per day allow a customer (subject to any bank-specific limits) to move about ZW$3 million per month, using a single account, and much more if he/she is multi-banked and/or uses third party accounts.
The FIU has noted KYC shortcomings in the ZIPIT system that make it difficult for banks, regulators and law enforcement agencies to speedily identify counter-parties to a transaction, or to identify multi-banked users.
Until such time when adequate safeguards are built into the ZIPIT system to minimize the money laundering risk, ZIMSWITCH is directed to implement, with immediate effect, daily and monthly ZIPIT limits of ZW$20,000 and ZW$100,000, respectively.
The limits have been arrived at cognizant of the reality that very few Zimbabweans earn more than ZW$100,000 per day, and those who do have other payment options available for higher value transactions.
W. Kapofu
For Director-General
Financial Intelligence Unit
The full text of the FIU directive to banks

Stiffling the economy

As always the authorities would rather not look in the mirror and are preferring to issue abitrary orders as always. What they are essentially doing is telling people how much money they can spend per day. The order doesn’t even seek to distinguish between businesses and individuals and in any case due to cash shortages the informal economy has come to rely on ZIPIT especially in the wake of other similar abitrary measures on Ecocash.

Sure in most countries the government or some form of authority imposes transaction limits and regulations. However, these tend to be generous. Despite the astronomical sound of it all, $20 000 ZWL is equal to about $400 or less on the real market.

The fact of the matter is that there are foreign currency shortages in Zimbabwe. Cutting the feet of some traders is not going to suddenly increase that supply. The best that can happen is it will cripple some businesses and kill them dead. The remaining few players, including the government itself according to some whispers in the dark, will still have to pay a premium for it.

More and more people will now shun a currency that might complicate things by locking away your money in an account. Money you cannot move at will. By definition that reduces the liquidity of bank balances and increases the gap between them and cash.