Zimbabwe’s banking sector continues to suffer from the illegal sanctions imposed on the country with the latest being the cutting off of correspondence banking relationships with local banks by South African banks.

The US government this week extended the sanctions by another year, and in the process increasing the country’s risk.

Zimbabwe has failed to import sufficient foreign currency notes because South African banks, who feed the country with cash, have cut off correspondence banking relationships with local banks.

This was revealed by the central bank last week at its meeting with small scale gold miners.

The latest development casts in light the negative impact that the illegal sanctions imposed by the US under the auspices of the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) of 2003 have had on the sector.

Economist Dr Gift Mugano says the sanctions are real contrary to claims by opposition parties that they target just a few, adding that they have caused irreparable damage.

“The unfortunate part here is that contrary to claims by others who say that the sanctions are targeting just a minority, they are real and banks cannot be able to have access to lines of credit which has affected the growth of the company over the years,” Dr Mugano said.

Industrialist Mr Langton Mabhanga says the Office of Foreign Assets Control (OFAC) under the US treasury department punishes heavily any US entity that deals with Zimbabwean state companies  and the contagion effect of this dissuades others the world over from dealing with Zimbabwe.

“The sanctions increase what is called country risk and the cost of money for Zimbabwe comes with a premium and this means Zimbabweans pay more interest for the same capital due to the high country risk,” said Mr Mabhanga.

Admitting to the impact that the sanctions are having also on the regional economy, SADC member countries, including South Africa and Botswana are unwavering in their unconditional support for the illegal sanctions to be lifted.