Payments to 200,000 retirees on Zimbabwe’s public pensions scheme could be delayed this month, the national social security agency said, after a foreign currency dispute erupted between local banks and a payments software vendor.
Zimbabwe is battling an extended foreign currency crisis which has affected key imports such as electricity, fuel and medicines. Many firms with foreign ownership are also struggling to repatriate dividends to non-resident shareholders.
It’s National Social Security Authority, a mandatory public pension scheme, said on Thursday it could miss a June 13 deadline for paying its members because a software platform it uses to make the disbursements was demanding payment in foreign currency.
Payouts that were due on (June 13) might be delayed as the provider of the payment platform used by the banks is demanding to be paid in foreign currency, failure of which it will suspend services to them,” the authority said in a statement.
An authority spokesman said the payment platform was run by London-listed investment company Cambria Africa. One of the company’s subsidiaries, Payserv Africa, provides payment solutions to banks and 5,000 corporate clients in Zimbabwe.
On Wednesday, it announced it had suspended services over non-payment of foreign currency fees.
“The Company lost U.S. $170,000 providing services to banks in March and April 2019. Banks collectively owe Payserv Africa over U.S. $470,000 for over 4 million transactions concluded since 1 May 2019. The company cannot allow further accumulation of possible losses,” Cambria said in a statement.
It said Zimbabwean banks had frustrated its attempts to maintain the U.S. dollar value of its services following the devaluation of its currency, the Real Time Gross Settlement Dollar (RTGS) dollar, on the interbank market.
The Bankers’ Association of Zimbabwe, which represents the sector, was not immediately available to comment.
In February, Zimbabwe ditched a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars, merging them into the lower-value transitional currency called the RTGS dollar.
The central bank, which has tightly controlled foreign currency payments since May 2016, has moved to relax its hold, with most external payments now going through the banks and using a market-determined exchange rate.
The RTGS dollar has slid from a starting position of 2.5 RTGS dollars per U.S. dollar on Feb. 25 to 5.91 RTGS dollars to the dollar on Thursday on the official interbank market. It was trading significantly weaker, at 8.7 to the US dollar, on the black market on Thursday.