"How Many People Earn ZW$50 000 Or ZW$60 000?" - Mangudya Defends Withdrawal Limits
Reserve Bank of Zimbabwe governor John Mangudya defended bank withdrawal limits announced on Monday last week, saying the new levels were above average formal sector salaries.
This comes after criticism from stakeholders including a former finance minister, Tendai Biti, who said Mangudya was using the withdrawal limit to block access to the Zimbabwean dollar as a means to control inflation.
Florence Taruvinga, the president of the Zimbabwe Congress of Trade Unions (ZCTU) said the increase was insignificant. She said:
The nominal increase, while welcome, is not adequate as the percentage increase is below the annual inflation rate, which implies that in real terms there was no increase.
Exports and remittances have increased quite markedly over the period, 2020 to 2021 for instance, exports rose from US$3.7 billion in 2020 to US$6.2 billion in 2021, while remittances rose from US$1 billion in 2020 to US$1.4 billion in 2021.
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Mangudya set new mobile banking limits per transaction of ZW$25 000 and ZW$10 000 for person-to-business and person-to-person transactions, respectively.
Previously, the limits were ZW$20 000 and ZW$5 000, respectively.
The maximum limit for individual-to-business transactions was set at ZW$100 000 per week while the person-to-person transfer limit was set at ZW$70 000 per week.
Speaking at an event organised by the Zimbabwe Economic Society to review the MPS, Mangudya said in arriving at the limits, the bank was informed by average salaries. He said:
We were of the view, and we are still convinced, that the figures which are there are quite high.
If you look at the average salaries in Zimbabwe, they aren’t all that high.
How many people are earning more than ZW$50 000 or ZW$60 000 in the general economy?
They are not as many as you think they are. So, we looked at the general salaries in the market.
He said ZW$100 000 is equated to US$417, using a parallel market rate of US$1:$240. A salary of ZW$50 000 or ZW$60 000 translates to US$208 or US$250, respectively.
Mangudya added that RBZ will be monitoring the numbers and adjusting the limits accordingly.
He said the limits were also meant to limit foreign currency parallel market activities.
While the new limits were based on average salaries in the formal sector, about 60% of Zimbabwe’s economy is now in the informal sector, which is rarely considered in government planning.
More: NewZimbabwe
