7 April 2017

Zimbabwe: Cash Crisis Deepens, Govt Offers No Solutions

Photo: allafrica.com
Zimbabwe's bond notes and U.S. dollar notes.

Zimbabweans continue to struggle with a cash crisis that is deepening by the day with even the surrogate bond notes vanishing from banks while government and monetary authorities offer little by way of solutions.

Around central Harare Friday, a NewZimbabwe.com news team found long queues at most banking halls with withdrawals generally limited to no more than $150 and only in bond notes.

Said a customer at a Stanbic bank branch; "I have been here since morning and it is almost mid-day. I do not know if I will be able to get anything.

"Twice the (bank) ran out of cash. I understand they are now issuing coins and I have no option but to accept them or go home empty-handed."

Zimbabwe ditched its own currency in 2009 with the government forced to officially endorse the public switch to the US dollar.

But with the country's comatose economy not exporting much, the US greenback was soon desperately short, leading to queues at banking halls and widespread frustration.

A move by the Reserve Bank of Zimbabwe (RBZ) to mitigate the crisis by introducing millions of so-called bond notes has failed to end the queues.

Said a bank manager with a leading bank on Friday; "The situation is dire. We have run out of cash and our daily allocation has been exhausted. We are now waiting for tomorrow's allocation."

The problem was also evident at city supermarkets as people could be milling about looking for those with cash and willing to make their purchases using bank cards at point of sale (POS) machines.

Some shops were also only giving change in bond notes and coins, retaining the precious US dollars for themselves.

Government and central bank officials have urged the public to use bank cards and mobile money platforms to transact but some shops are refusing to accept such payments.

While monetary authorities said the bond note had the same value as the US dollar, street currency traders have a different view. On Friday, they were offering US$100 at rates of around 110 bond notes.

Finance Minister Patrick Chinamasa was forced to issue a statement to Parliament Wednesday explaining that the country's current account deficit had contributed to the current cash shortages.

"Factors underpinning cash challenges are beyond banks," the minister said.

"Banks find themselves in a difficult position where they are compelled to ration cash withdrawals in order to meet their customers' demand.

"Banks have, therefore, continued to explore pragmatic measures to meet their customers' demand for cash."

The minister also condemned the non-banking of cash by traders and threatened action against those responsible.

"This indiscipline is counterproductive and cannot continue to be tolerated. Money is like blood, it needs to circulate for the economy to survive. Money should be circulating in order to deal with queues at the banks," he said.

"To date, three traders have been hauled before the courts for not banking their sales proceeds in line with the laws of the country from as far back as June 2016. They have all pleaded guilty to the offence and they now await their sentences after the Easter holidays."

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