HARARE – Zimbabwean banks are still struggling to re-establish themselves after the economic crisis that forced people to operate on a cash basis and left most money outside the banking system, Barclays said.

Barclays Zimbabwe managing director George Guvamatanga told an investment conference on Monday businesses were still worried about politics despite the formation of a unity government between arch rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai.

“We are all arguing over what premium to put on the Zimbabwe risk factor, and what that risk is,” he said. “We are still trying to find our feet.”

Guvamatanga said banks in Zimbabwe held $475 million in deposits at the end of May while an estimated $600-$1,000 million cash was circulating outside the banking system.

Zimbabweans lost confidence in the financial sector years of hyperinflation that triggered bank note shortages and left many people having to carry bundles of cash for simple transactions.

“We still have an issue of trust because people lost their money during several currency changes, and so they are not going to the banks,” he said.

Guvamatanga said while the adoption of multiple foreign currencies had eased inflation of 230 million percent a year ago, banks were struggling to attract savings and offer loans.

But he said Barclays Zimbabwe, a subsidiary of British bank Barclays Plc and one of four foreign banks in the country, would be able to expand in a market with 28 banks.

“Despite the challenges, Barclays is maintaining a consistent strategy and direction. We believe that we can cautiously and confidently grow the business,” he said.

He declined to give earnings or revenue forecasts, citing stock exchange disclosure restrictions.

Guvamatanga said Barclays had managed to maintain all 40 branches and 987 workers despite an economic decline described by the World Bank as the fastest outside a war zone.

“Although other banks have been forced to retrench and to introduce short-working hours, we have maintained our position because we are looking ahead,” he said.

There had been “some positive change in both the political and economic environment” since February’s launch of a power-sharing government, he said.

In January, Harare lifted a ban on the use of foreign currency to stem hyperinflation that had rendered the Zimbabwe dollar almost worthless.

The move left Zimbabwe without an interbank market and reduced the central bank to a simple supervisory role as it lacks foreign currency reserves to be banker of last resort.

Reuters