The Reserve Bank of Zimbabwe (RBZ) says the prevailing shortage of cash is being caused by “ungrateful” foreign traders who are operating in the reserved sectors of the economy and are hoarding cash.
The central bank made the accusation as the cash crisis deepened last week with depositors failing to access money at banks while others said their banks had cut by half the daily withdrawal limit to $50.
The development comes as bond notes are also disappearing from the formal banking system.
RBZ governor John Mangudya told Standardbusiness last week that some “unscrupulous traders are hoarding the bond notes possibly because they are possessed by the demon of arbitrage with a high propensity to trade in the parallel market”.
He said such practices would not be tolerated, adding that the RBZ would invoke the Bank Use Promotion Act [Chapter 24:24] to ensure that traders banked surplus cash.
The legislation requires all traders to bank any surplus cash within prescribed time frames and to keep records of cash receipts and payments on each day.
“We find it very absurd that traders operating in the reserved sectors of the economy have the tenacity to flout laws of the country instead of showing discipline of gratitude for being allowed to operate in sectors preserved for the indigenous people,” Mangudya said.
“They need to show gratitude and start banking their surplus cash at banks.”
The reserved sectors of the economy, which include transportation, passenger buses, taxis and car hire services, retail and wholesale trade, barbershops, hair dressing and beauty salons and employment agencies, among others, have been invaded by Indians, Nigerians and Chinese entrepreneurs.
Mangudya said the disappearance of the bond notes “reflects indiscipline of the highest order by traders”.
“It is this unwarranted rent seeking behaviour which negatively affects consumers and the banking public who are forced to spend unproductive time queuing at banks for cash,” he said, adding that there was need to exorcise the “demon of market indiscipline characterised by arbitrage, externalisation and rent seeking behaviour”.
Queues swelled at most banking halls in Harare and Bulawayo last week as depositors waited patiently to withdraw their money
So severe has the crisis been that some banks have been issuing out large amounts of money in bond coins after running out of notes.
The situation has been worsened by the fact that retailers that have been providing cash back facilities are also constrained as most of their customers now pay using plastic money or mobile money.
A customer at CBZ Bank in Harare told Standardbusiness on Friday that a security guard manning the automated teller machine had issued out cards to depositors who would be served that day. The cards issued totalled 200.
“We are not happy because we are wasting so much time in bank queues. We are being treated like we are the ones at fault, but at the end of the day it’s my money that I have worked for,” said a depositor who referred to himself only as Dee.
He said the CBZ was allowing only $60 in withdrawals a day, which he said was inadequate to meet basic needs.
The depositor said the obtaining situation was making life difficult for ordinary people who were working hard to earn a salary but were then unable to access it.
A ZB Bank depositor, Tim Manhiri said he had been queueing every day for the whole week but was only able to withdraw $50 once.
“We have queued since six in the morning and the security guard has given 60 card numbers saying that was the only number of clients that the bank would be able to serve today,” he said.
“I think RBZ should implement a plan where people can withdraw their money at once if one has $200.
“There are still several instances where we need to use cash and this crisis is inconveniencing us badly.”
FBC depositors we spoke to said despite the long queues, they were able to withdraw $100 a day.
Stanbic bank customers said they had been queuing but were being given $50 a day, while at Steward Bank clients said they were getting $60 a day.
The situation was the same in Bulawayo with long queues at CABS, POSB, FBC, ZB, CBZ and Stanbic banks. Some banks such as Stanbic were imposing a $50 daily withdrawal limit. Some such as ZB had no money at all, with a bank official saying they were waiting for deposits.
A banker told Standardbusiness in an interview that the shortage of cash was the reason why people were holding onto it.
“All the dollars that have been taken from the system need to be replaced in large part by bond notes. Since the dollars have disappeared, people still need cash to do transactions,” the banker said.
“In 2014, cash holdings in the economy were about $400 million against a deposit base of $3,5 billion. Now the money supply has expanded but the cash proportion has fallen.
“There is simply not enough cash in the system to sustain the minimum level of cash transactions in the economy.”
The banker said RBZ needed to inject more cash in order to discourage people from hoarding.
Mangudya said individual banks and the RBZ cumulatively imported on average $40 million per month.
This was in addition to the $120 million of bond notes and $20 million bond coins in circulation, he said.
Will RBZ issue more bond notes to ease the cash shortages?
“Not at all,” Mangudya retorted. “So far we have issued $120 million of bond notes which are circulating in the market against the export incentive value of $130 million.
“We need to act collectively as Zimbabweans by ensuring that money is banked. Indiscipline should not be rewarded by issuing more bond notes.”
Zimbabwe’s cash shortages have persisted since December 2015 despite interventions by the RBZ aimed at stabilising the situation and economists say this is due to the poor performance of the economy. – The Standard