20 April 2017

Zimbabwe: Cash Challenges Call for Mindset, Admin Change

opinion

In May 2016 Nokia CEO ended his speech saying "we didn't do anything wrong but somehow we lost". The world changed too fast and is changing too fast every day. As Zimbabweans if we don't embrace change we shall go the same way like Nokia and continue aiding to our liquidity crunch. Don't ask me how we came to be where we are, my major concern is how we can manage the situation we are in and bring normalcy.

Traditionally as a country we have been used and exposed to using hard cash for almost all our transactions.

It is not even surprising to see someone paying hard cash for a house selling for $200 000, something that can trigger police investigations in some countries.

The use of plastic money and other forms of payments have been there in our country for a very long time but we never utilised the facilities due to cash addiction syndrome.

Since the introduction of the US$ our country turned into a hunting ground for the greenback turning our economy into a consuming economy as businesses competed in importing cheap poor quality products.

I am glad the country has realised the importance of rejuvenating our manufacturing industries than continuing to feed on imports. We are crying for exports of our own.

The start of the tobacco selling season this year has brought hope to a lot of businesses. It is a time every business expect to boost sales and its true sales are going to improve but I see the majority of our SMEs missing out on this opportunity.

Due to the liquidity challenges the country is currently facing unlike other years, this year all farmers have been asked to provide bank accounts as their payments will be made through their banks, resulting in their buying power is going into plastic money.

The majority of SMEs are not going to reap as much because they don't have POS machines. They are operating without POS machines up to now due to two main reasons.

The first is their inability to change, the blindness in not seeing the need to adopt plastic money.

Once you are in business there are things that you have to do right and business trends you have to follow.

Being a small business is not an excuse for not adapting to the use of plastic money in the same way big businesses have done.

It is actually a lack of vision and ill advice and a result of unethical business practice. The most common questions I have been asked by the majority of SMEs as we move around registering those who want POS machines for their businesses and encouraging their acquisition are, "how will I restock because where I order my socks they want cash.

"How do I get my money if I want cash as the banks do not have cash? How do I get forex when I want to restock outside the country where I get my goods?"

I think by now the majority of wholesalers should be having POS machines. Those who do not have POS machines by now are the ones who are amongst that group of mercenary business people hunting for US dollars and externalising it.

It is a pity the Reserve bank of Zimbabwe doesn't have a law that makes it compulsory for wholesalers to have POS machines.

Their acquisition is by choice and if one does not want there is no enforcement law to that, a situation that has contributed so much to the disappearance of US dollars from circulation, which has rejuvenated the black market.

People have spoken of bad money chasing away good money (Grasham's law), I don't believe bond notes are bad but our mindset has refused to change and doesn't want to adopt to the measures being put in place to ensure survival.

If the majority of our businesses are to do business in good faith and bank their daily takings even the US dollars would be finding its way to the banks.

Even those who want to travel out of the country to restock could get their forex from RBZ. I grew up in a Zimbabwe where people used to apply for forex from the banks when they wanted to travel out of the country before this thriving black markets surfaced.

Today we now have a different mentality where we are not supporting our banking system and there is no more utmost good faith between the banks and the businesses.

Banks are also guilty of high administration costs which are actually driving people away from banks.

When you leave your money in your account for a very long time you expect it to accrue interest and give you more but it is not the case with our financial institutions.

You risk losing all of it the longer you keep it in the account. So at the end of the day people will see sense in keeping their money under their pillows instead of banks.

Bank's excuse for not giving interest on money in accounts is that, if you want interest you should open a savings account but even those who entrust banks with their money in corporate accounts should also enjoy these benefits.

This kind of banks behaviour is contributing to the loss of utmost good faith with financial institutions.

As Harare Chamber we experienced that with one of the banks, we lost almost a thousand dollars but the funny part the bank had classified the account dormant and that's the time we wished we had taken the money and lent it to our members it could have made sense than support a bank that punishes you for leaving your money with them.

I am not saying banks should not charge administration fees but the charges are unreasonable.

It actually defies the efforts we are making amongst our members to encourage banking. The second reason why some of our SMEs do not have POS machines are due the maladministration by some of the banks.

I don't know whether they have run out of the POS machines or what? We have some businesses who applied for POS machines as far as October 2016 and are yet to receive them.

As Harare Chamber of SMEs we enjoy a good relationship with RBZ and the majority of businesses in Harare who have raised such issues with us have been assisted by the central bank.

We always collect such information and pass to the RBZ, who always does their best to assist SMEs. At this stage I also advise SME businesses to take advantage of the cross boarder facility launched by RBZ through their subsidiary Homelink.

Through this facility raising forex to buy goods outside the country should not be your worry if you join the scheme and follow all its protocols.

Coming back to our tobacco selling season -- tobacco farmers also need to be told the truth about our liquidity situation. There is no need to for RBZ to put itself under pressure by raising their daily limits to $1 000 a day when the liquid is not there.

As a result we witnessed chaos that required the intervention of the riot police at some auction floors. Farmers are Zimbabweans and they are part of the matrix they should also use plastic money and also change their attitude just like everyone else. This plastic money revolution is necessary it is the way to go whether we like it or not.

Gone are the days of moving around with a pocket full of dollars -- it's not even necessary if we change our mentality as a country and adopt to use plastic money. In a country where you can now pay for almost everything using alternative payment methods other than cash I don't see any reason why people should sleep in bank queues or spend the whole day waiting for cash at banks which do not have the liquid.

Today we can use other forms of payment for anything using plastic money, RTGS, Ecocash, Telecash, one wallet etc but the majority of us do not want.

Hanging on to outward tradition of using cash we benefit people hunting for the US dollar. There's is still a very big cluster of people who will always tell you that they want money to pay the maid, gardner, landlord, wages at the farm etc but all those people should be encouraged to accept the other forms of payments other than cash.

This particular group has the capacity to withdraw an amount for you from your account at a certain percentage.

A tomatoes farmer in Mtoko should have their own POS machines and should be able to pay the transporter through plastic money after selling their produce at Mbare Musika.

That is only possible if we change our mindset as citizens of this country. As long as we still have the majority of our SMEs operating without POS machines it will be very difficult to convince the ordinary citizen to believe the effectiveness of plastic money.

Let's be positive about plastic money and not leave the war for our RBZ governor to fight alone.

This economic war is for every Zimbabwean, it's about us as a Nation. Together victory is guaranteed.

Please note: All SMEs in need of POS machines should apply through their different banks and those who have applied and have not received them should approach the Chamber of SMEs for assistance. No charge will be is levied for this assistance.

Taurayi Marembo is the Chairman for Harare Chamber of SMEs.

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