BANKS are aware that the point of sale machines (POS) they have dished out everywhere are underpinning a currency black market that has triggered high inflation and money supply.
These twin evils are bad news.
We witnessed the damage that they can inflict on the economy when the Zimbabwe dollar collapsed under 500 billion percent hyperinflation in 2008, and during the most recent decommissioning on the domestic unit.
Bankers have either shunted the know your customer (KYC) principle out of the window for selfish reasons, or they are only applying KYC where it suits them.
If banks had cared to act properly, the mayhem that we have seen in the past decade, including last month’s collapse of the Zimbabwe currency, may have been avoided.
It is not a secret.
POS machines are on display in the streets, in shopping centres and everywhere.
They are being used in back stage currency dealings.
Without shedding a sweat, dealers, who are funded by influential people, make a killing daily.
But the ramifications on currency stability are dire. Before it was decommissioned on April 5, the Zimbabwe dollar had surrendered about 800% of its value in 2023.
Now, we have an awkward situation where Zimbabwe Gold (ZiG), which replaced the unit only last month, has suffered a bloodbath on this dark market that some banks are propelling, while appreciating on the official market.
Which market should we believe?
POS machines have emerged as the cog of volatility.
This is because many banks are paying a blind eye to this elaborate display of delinquency.
They have chosen profit at the expense of decade-long campaigns to defend the currency, and save millions from the pain of economic decay.
Bankers know that high level transactions are taking place on the streets, using the machines that they provide.
Instead of whipping transgressors into line, they have inadvertently supported the black market by taking no action.
They will deny this.
But, I will argue that it is within their power to monitor transactions flowing through POS machines and summon those executing suspicious deals to explain.
But they are ignoring these clear cases of illicit financial flows to bolster their earning capacities through hefty transaction fees generated from black market transactions.
From this point of view, the black market is now clearly a cash cow for some banks.
It is an important part of the build-up of big non-interest incomes that they have been reporting, which are far higher than the sales they generate from core business — lending. The problem with most financial institutions is that they are only interested in numbers. Put human faces on this, and you realise the pain.
