Reserve Bank of Zimbabwe (RBZ) governor John Mangudya explained how the “targeted” sanctions imposed by the United States of America on the country affect the financial system.
Local banks’ ability to access foreign lines of credit, as well as to process international payments has been negatively affected. Said Mangudya:
It’s only a few banks which can take Zimbabwe’s risk. Zimbabwe is under sanctions and the sanctions are in three parts.
The first one is ZIDERA, which says no one should give Zimbabwe development finance, be it the IMF, the World Bank or the African Development Bank.
Secondly, there is OFAC, which says that the transactions from Zimbabwe should be scrutinised for compliance risk.
Third is Zimbabwe’s exclusion from AGOA (the African Growth and Opportunity Act a piece of legislation that was approved by the US Congress in May 2000, whose purpose is to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region), which means we do not have market access.
These three pillars have placed immense constraints on the Zimbabwean economy.
US President Donal Trump extended the economic sanctions imposed on Zimbabwe by one year.
Trump claimed Zimbabwe’s government continue to pose an “unusual and extraordinary” threat to American foreign policy.