Cash Crisis Hits Zimbabwe as RBZ Fails to Deliver ZiG
13 May 2024
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Business Reporter- Zimbabwe is grappling with a severe cash crisis as the Reserve Bank of Zimbabwe (RBZ) fails to supply the market with the Zimbabwe Gold (ZiG).

Cash scarcity adversely impacts aggregate demand, particularly in the informal sector, which constitutes the majority of Zimbabwe’s workforce and heavily relies on cash transactions.

RBZ commenced the circulation of ZiG notes and coins on April 30, nearly three weeks after ZiG replaced the Zimbabwe dollar, which had experienced a staggering 75% depreciation this year alone. 

The shortage of cash has reverberated across various sectors, including transport, supermarkets, and the informal market, causing disruptions to business operations.

Economist Gift Mugano, speaking to a local weekly, attributed the cash shortage to the Central Bank’s “incompetence,” stating, “We do not have enough ZiG from the central bank. The size of the money supply is about ZiG90 million, whereas the size of our economy is about ZiG20 billion. So, the question is how does the government expect to provide enough cash in the market with such a small share of ZiG? The central bank has not printed enough ZiG. Last time I checked, they had only printed small denominations, thereby starving the market. This is a failure; the bank must print enough ZiG currency and sufficient denominations for the market. At this stage, we should not be struggling to access ZiG just for change; it’s serious incompetence on behalf of the central bank.” Mugano warned that the scarcity of ZiG could lead to increased dollarization, highlighting the risk of relying on foreign currency if ZiG remains unavailable.

Another economist, Prosper Chitambara, suggested that the cash shortage could be a deliberate strategy by the RBZ to prevent excessive liquidity in the economy and curb inflation. 

Chitambara stated, “It could be a supply issue; the central bank did not print enough money. Maybe they are trying to monitor the situation because you do not want to introduce too much liquidity into the economy; it can actually have a destabilizing impact. Of course, there is a strong demand for ZiG, especially to facilitate change. So obviously, we need to create that fine balance in terms of ensuring there is enough supply.”

Fanwell Mutogo, CEO of the Bankers Association of Zimbabwe, indicated that banks typically order cash from the central bank based on anticipated customer demand and encouraged customers to embrace digital transactions as part of a broader digitization effort aimed at reducing reliance on physical cash and enhancing efficiency.

The introduction of ZiG marks Zimbabwe’s sixth attempt at establishing a functional local currency since the hyperinflation crisis of 2008 decimated the Zimbabwe dollar (ZWD).