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Zimbabwe’s Financial Regulatory Body in Focus

The financial regulatory bodies in Zimbabwe are responsible for ensuring the stability of the country’s financial system. There are five principal agencies that play a crucial role in regulating and supervising the financial sector.

Regulation: A Necessity for Financial System Stability

Regulation is essential to ensure consumer confidence in the financial industry. There are three main reasons why financial system regulation is necessary:

  • Ensuring system stability
  • Providing smaller clients with protection
  • Protecting consumers against monopolistic exploitation

A Brief History of Zimbabwe’s Financial System

Zimbabwe’s current financial regulatory and supervisory architecture was inherited from the Rhodesian Government at independence in 1980. The Reserve Bank of Zimbabwe, Commissioner of Insurance and Pension Funds, and Zimbabwe Stock Exchange were the initial regulators. Since then, the financial system has undergone several changes.

Zimbabwe’s Financial Regulatory and Supervisory System

The five principal agencies responsible for financial regulation and supervision are:

  • Ministry of Finance and Economic Development: The ultimate supervisor of the financial system.
  • Reserve Bank of Zimbabwe (RBZ): Responsible for regulating and supervising banks, ensuring compliance with International Standards set by the Bank for International Settlements.
  • Deposit Protection Corporation: Protects depositors, ensuring safety and soundness of the banking system by preventing bank runs.
  • Securities and Exchange Commission (SEC): Regulates securities services in Zimbabwe, including securities exchanges, Central Securities Depositories, and respective members.
  • Insurance and Pensions Commission (IPEC): Regulates and monitors the insurance and pension industries in Zimbabwe.

Ministry of Finance and Economic Development

The Ministry of Finance is responsible for overseeing all regulators and supervisors of the financial system.

Reserve Bank of Zimbabwe (RBZ)

The Reserve Bank of Zimbabwe is responsible for regulating and supervising banks, ensuring compliance with International Standards set by the Bank for International Settlements. It also ensures that the country’s financial system remains up-to-date with the latest global practices.

Deposit Protection Corporation

The Deposit Protection Corporation protects depositors, ensuring safety and soundness of the banking system by preventing bank runs. It provides a guarantee fund to cover deposits in case of bank failure.

Securities and Exchange Commission (SEC)

The Securities and Exchange Commission regulates securities services in Zimbabwe, including securities exchanges, Central Securities Depositories, and respective members.

Insurance and Pensions Commission (IPEC)

The Insurance and Pensions Commission regulates and monitors the insurance and pension industries in Zimbabwe.

Challenges in Zimbabwe’s Financial Regulatory Body

There are multiple regulators in Zimbabwe’s financial regulatory body, which can lead to confusion and inefficiency. The regulation and supervisory architecture is based on a silo approach, with each regulator responsible for a specific industry or functional line. This can create challenges in harmonizing accounting practices and ensuring consistency across industries.

References

[1] The Intact One, accessed: 6 October, 2020 [2] John D G Nhavira, Evangelista Mudzonga, and Everisto Mugocha, Zimbabwe Economic Policy Analysis and Research Unit, accessed: 6 October, 2020