Zimbabwe's central bank chief has canceled the licenses of 16 organizations involved in the transfer of money from Zimbabweans in the diaspora, citing non-performance and irregularities.
In a statement, Reserve Bank Governor Gideon Gono charged that some of the money sent by Zimbabweans working abroad through the money transfer agencies ended up on the black market.
The move, which took the establishments concerned by surprise, means money sent home by an estimated three million Zimbabweans working abroad can only come into the country through commercial banks. Money can also be channeled through the central bank's Homelink plan, which Gono established for the purpose of keeping an eye on foreign currency coming into the country.
The money transfer agencies, the banks and Homelink all pay out the money sent to them in the Zimbabwe dollar equivalent. The difference is that while the banks and Homelink pay out at the official rate pegged at $250 to one U.S. dollar, the agencies pay out at the black-market rate currently at 12-hundred to the U.S. dollar.
One of the affected agencies is Western Union, which has branches all over the world. An Associated Press report quotes officials at Western Union as saying business was suspended to await clarification from the central bank and to prepare an audit and appeal against the cancellation of its license.
Gono also announced the hiking of the main lending rate to 500 percent. Only weeks ago, Gono cut the rate by 550 percentage points to 300 percent, a move he said was aimed at the continued flow of credit to the productive sectors of the economy.
In a related development Zimbabwe's inflation for the month of September dropped to 1,023 percent from the previous months 1,200 percent. Despite the drop, Zimbabwe's inflation rate remains the highest in the world.
Zimbabwe's economic meltdown, now in its sixth year, is characterized by a chronic foreign currency shortage resulting in shortages of food, fuel and electricity. Eighty-percent of Zimbabweans are unemployed and life is progressively getting harder for them.