Street hawker Yvonne Chikotsa last visited a bank in 2008, near the zenith of Zimbabwe’s hyperinflation. She would wake each morning at dawn to beat long lines and withdraw more than one trillion Zimbabwean dollars, which was what a loaf of bread cost at the time.

“I still have mortal fear of banks,” said Ms. Chikotsa, who sells used clothing at a market in Harare’s impoverished Mbare district. She blames the Reserve Bank of Zimbabwe for allowing the runaway inflation that destroyed the value of her modest income. Now, she says: “My pillow is my bank.”

Zimbabwe’s economy is growing, in part because the government in 2009 discarded the country’s currency in favor of the U.S. dollar. The move tamed inflation and slowed a rush to the exits for investors. Yet deep-seated distrust of the government’s handling of money matters lingers among ordinary Zimbabweans, depriving banks of the deposits they need to drive a faster economic expansion that might ease some of the country’s tensions.

The uncertainty has turned Zimbabwe into a nation of hoarders. The grubby graying American dollars on Zimbabwe’s streets—including bountiful supplies of $2 bills, last printed by the U.S. Treasury in 2006—attest to a robust cash economy that largely bypasses the country’s banks. Deposits in Zimbabwe’s banks have recovered from $1.25 billion at the beginning of 2010 to some $3.3 billion since “dollarization,” but people hold more than that amount—or about $3.5 billion—outside of banks, according to the Bankers Association of Zimbabwe.

Zimbabwe’s cash-starved banks, and a central bank that has lost control of its currency, mirror challenges in other countries, including Greece, Malawi and Swaziland. But troubles at Zimbabwe’s central bank have reached a different level of dysfunction.

Over the past decade, the reserve bank lent $1.5 billion to President Robert Mugabe’s government for pet projects. The bank now owes $1.1 billion to a cast of regional development and central banks that it says it can’t repay because the government hasn’t reimbursed it.

Gideon Gono, who has led the reserve bank since 2003, is also battling allegations he has embezzled millions in central bank funds for personal use. Mr. Gono hasn’t publicly addressed the allegations, and in an email response to The Wall Street Journal, Mr. Gono declined to comment in detail. He said he would “respond to pressures” about the allegations “at the appropriate time.”

In the meantime, the bank can’t even serve as Zimbabwe’s lender of last resort. The government is in talks with the African Export-Import Bank to create a $100 million program to restart the lender-of-last-resort facility.

Enlarge Image

Associated Press
Alex Vaviro runs his dirty U.S. dollars through a washing machine in Harare, Zimbabwe, in July 2010, in an effort to keep them fresh.

Short of that, if the central bank can’t step in to guarantee bank lending, liquidity will dry up, which is what has happened.

The string of troubles has left Zimbabwe’s financial system gasping, depriving businesses of capital at a time of sky-high unemployment. Zimbabwe officials estimate 90% of the country’s working-age population is unemployed.

After Zimbabwe abandoned its currency in favor of the greenback, the economy grew at an annual rate of 6% in 2009 and 9% in 2010. But growth dropped back to a rate of 6% last year and will fall to 3.1% this year, the International Monetary Fund predicts.

The crippled banking sector is contributing to the eroding growth rate, said Yvonne Mhango, Renaissance Capital’s economist for sub-Saharan Africa.

“Basically there is no monetary policy. I think they’re out of ideas,” Ms. Mhango said.

The banking troubles have dimmed an already bleak investment picture.

The country has untapped deposits of platinum and rich agricultural land. But few are willing to risk losing their investment to the “indigenization” agenda of President Mugabe, which aims to transfer farms and control of businesses and mines to blacks.

The Reserve Bank of Zimbabwe’s ideas for shoring up the financial sector have had a similar effect, economists say. In February, the central bank demanded that foreign banks, including Barclays BARC.LN +1.37% PLC and Standard Chartered STAN.LN 0.00% PLC, keep at least 70% of local deposits and assets in the country. Mr. Gono has promised meetings with banks and unspecified punishment for those that don’t comply.

A spokeswoman for Standard Chartered in Harare, Lillian Muchafara Hapanyengwi, said the bank always tries to comply with local laws. “All regulatory issues are given the highest attention,” Ms. Hapanyengwi wrote in an email. Barclays didn’t respond to requests for comment.

The demands have made banks hesitant to lend in Zimbabwe, hurting small domestic ventures that need capital to expand.

Tofara Kwenda, who earns $1,000 a month as a field officer for a democracy-advocacy group, applied last year for a $2,000 loan from Standard Chartered to open a candle-making business.

He says the bank never ruled on his application, even after a bank official called to scold him for complaining on his Facebook page about the slow process. Eventually, he got a loan from one of the many for-profit microfinance firms that have proliferated in Zimbabwe as traditional banks have pulled back.

“The banks are not grateful,” Mr. Kwenda said. “I am just using my bank account as a conduit to get my salary, which I immediately withdraw and keep at home.”

The distrust of banks is a problem for small domestic lenders that haven’t been able to rebuild deposit bases enough to expand their businesses, economists say. Many of Zimbabwe’s local banks have merged or sold majority stakes after struggling to meet capital requirements. The government is pushing for more consolidation.

Meanwhile, Zimbabweans are trying to get by without traditional loans and bank accounts.

Ms. Chikotsa, the 33-year-old clothing merchant in Harare, said she had never heard of Mr. Gono or Zimbabwe’s reserve bank until her small deposits started losing their value so rapidly.

“We were only taught to count to a thousand when we were in primary school, but that man, Gono, got us to know figures that we never thought existed,” Ms. Chikotsa said.

The government says it wants to compensate depositors for the money they lost. But three years have passed, and Ms. Chikotsa is still waiting.

Write to Patrick McGroarty at [email protected]

Keisha SweetJuice Trini
Sista claim she not worried about me but she reading my facebook statuses and comments everyday and telling lies about I am talking about her kids them. Stop lie to make people sorry for u. U are pathetic girl

Keisha SweetJuice Trini
If u need my address just let me know cause I am not hiding.

Mar 22 at 4:22am · Like

4 people like this.

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Keisha SweetJuice Trini
Lol Jerome they know who they are.

Mar 22 at 4:27am · Like

KeishaPosh Brown
Keisha ignore these ppl, u r Better than this stop making these ppl draw u out its not worth it at all

Mar 22 at 4:37am · Like

Balla Beris
Where 2

Mar 22 at 4:41am · Like

Tiffany Reed
U muss comment ms posh go to sleep lol

Mar 22 at 4:41am · Like

KeishaPosh Brown
@tiffany lol leave me alone I sm still waiting for u

Mar 22 at 4:43am · Like

Tiffany Reed
Lol Amma hit u up now ms posh

Mar 22 at 4:44am · Like

KeishaPosh Brown
Call me on my house phone check ur inbox

Mar 22 at 4:51am · Like

Denise DenDen Singh
Keisha….why are you even wasting your time? Let God in and let go off the garbage. Yah big woman. Leave the kiddie bs for the kids.

Mar 22 at 4:52am · Like · 2

Keisha SweetJuice Trini
True den but sometimes the heathens get u there although u avoid them. Trust me but I be catching myself. Lol

Mar 22 at 6:13am · Like · 1

Keisha Gibbs
Keisha you and those people again..ignore them, trust me, answering them make them visible and makes them seem viable in your life, when they’re not!! it hurts them more when you make them invisible…

Mar 22 at 6:45am · Like · 1

Keisha SweetJuice Trini
Marva Ingram say that I do not have the right to say what I want and chat who I want on my facebook because although Sista is not my friend on fb and she has block me she still go on my page everyday through someone else page to see my statuses and comments. What u all think about that?

Mar 22 at 2:41am · Like

4 people like this.

Dianna Mcpherson
Lol u got sumthing she want Lmaoooo she’s a stalker

Mar 22 at 2:46am · Like

Keisha SweetJuice Trini
Past stalker cause when u block somebody that mean u do not eant to see or hear what is on their page right dianna?

Mar 22 at 2:48am · Like · 1

Dianna Mcpherson
U so right about that hun …

Mar 22 at 2:51am · Like

Marva Ingram
I never say u did not have the right to talk but say it to the person faceccccc. And stop ride them back .and im not Facebook wach Dog mi care 0 -because 0-0=O i see no evil hear no evil .Remember that keisha .war is ugly and love is lovely

Mar 22 at 3:46am · Like

Keisha SweetJuice Trini
I hope everybody know war ugly and take no prisoners. I talk where I want to talk. After is not my friend for me to walk up to her and say u nuh look good, u a wear the same nasty wig for months, u need lipo or fi go buy some clothes. No I laugh at her and put up my status. I tell my friends my opinion not a duppy who a collect disability. She retarded. Happy people do not leave their man in their bed and inna party a worry bout them so call ex man everynight. But tell her she can have him I released him long time she just had to easy. Mi nuh worry bout gal pussy cause mi nuh do girls. Lol she wish don’t she. Marva u know ur friend life miserable but my life happy and is not man make it happy. Waste gal Sista who just move out her father apartment at 33. Why she run in her house she only know bout vibes a party? Lmao.

Mar 22 at 4:10am · Like

Marva Ingram
Keisha please don’t call mi name

Mar 22 at 4:16am · Like

Marva Ingram
Ian is not my Ex. And i don’t want to hear it .im not out on the street a belitte mi self mi nor war with nobody fi man. Reaches me reaches u .i care 0000000000000000000000

Mar 22 at 4:22am · Like

Keisha SweetJuice Trini
I am not waring for no man no day. No gal nah violate me a dat is my problem. Men come and go but some people just cannot get that point.

Mar 22 at 4:25am · Like

Bernadette Brenda Jones
One word stalker lmaoooo real talk bottom line ………

Mar 22 at 12:10pm · Like

Keisha SweetJuice Trini
BRENDA LINK ME.

Mar 22 at 12:30pm · Like

Dionne Williams
I HATE TO SEE GROWN WOMAN WHO CLAIM TO BE INTELLIGENT ACT STUPID!! WHEN ARE YOU LADIES GONNA STOP. IS IT GONNA TAKE DEATH OR PRISON?? AND FOR WHAT A MAN!! YA;LL NEED TO REMEMBER YOU HAVE CHILDREN DEPENDING ON YOU, PLZ DONT MAKE IT REACH THE IF I CUDDA, WUDDA, SHUDDA STAGE AND THEN BE SORRY Keisha SweetJuice Trini, Dunkirk Sista.. I HOPE I APPEAL TO AT LEAST ONE OF YOU THIS MORNING IN JESUS NAME YA;LL NEED TO STOP B4 ITS TOO LATE.

Mar 22 at 6:10am

Last night the man of the hour Mr. Burgs was in attendance at Peter Party and so was all his women..A di fuss mi eva si him stand up ina 1 corna and naw play Mr GQ taking picture wid everbaddie. Tracy him woman a yaad si dung a di bar a watch him while Glama stand ina fi har zone. Dwl. Tracey mussi hear bout the posing up Thursday night wid him and Glama thats why she come out. Burgs look like him have DieAreeYaH di whole night. From wah day him no stop flop veachy, cause she a last in line afta glama and tracy. Glama Back in biznezz cause she well a advertise him party pan her Fb page. a wonda how him party ago tunn out wid so much owners coming out April . Lmao. Glama is you sponsoring the party muma?? inquiring minds want to know, because from wah day burgs juss a rope you back in so. $$ talk yess.