Mnangagwa fails to 'coup' cash crisis

Mnangagwa fails to 'coup' cash crisis
Published: 21 January 2018 (152 Views)
Cash shortages in Zimbabwe have persisted more than a month after the new administration led by President Emmerson Mnangagwa assumed power.

A snap survey last week by Standardbusiness established that the situation has in fact worsened as the cash-back facility that used to plug the gap has disappeared. Last year, the Reserve Bank of Zimbabwe prescribed a $20 maximum cash-back payout per person.

"Retailers are no longer giving out cash to customers and this is attributed to a surge in plastic and mobile money usage [which has grown] to almost 85%", said Confederation of Zimbabwe Retailers president Denford Mutashu.

In a recent interview, Bankers Association of Zimbabwe president Charity Jinya said banks were prioritising companies for cash disbursement.

"We are fully aware that we are importing more than we are exporting, have limited investment and that diaspora remittances are not covering the trade deficit; so it simply reflects the reality on the market. Most banks would naturally consider that it would be better to finance a company to import inputs to generate jobs and employment revenues than to simply use the forex for travelling outside the country, hence the restrictions on those [bank] cards," Jinya told Standardbusiness.

She said the banks got foreign currency from exports but that money accruing in banks was quickly gobbled up by importers.

So dire is the situation that disbursement through automated teller machines (ATMs) during the festive season was 81% lower than the same period the previous year.

During the week ending December 29 2017, disbursement through ATMs was $3,6 million compared to $19,37 million in the same period in 2016.

While consumption was lower than 2016, Consumer Council of Zimbabwe executive director Rose Siyachitema said there was a "slight" improvement during the festive week in 2017, although the figures were insignificant as withdrawing cash was difficult.

"I do not think there was ever a situation where there was plentiful money coming from the banks. What we understood or heard was that there was some improvement where consumers were getting some money from ATMs, but it was not plentiful," she said.

The cash crisis has also seen the massive return to the streets of cash dealers who have invaded the central business district with a vengeance. They are out in clear defiance of the legislation which criminalises money laundering and prescribes a jail term of 10 years for offenders.

Rates for the greenback are ranging from 40 to 45% when using EcoCash or bank transfers.

Long queues can still be seen at almost every bank in every city, town and growth point across the country.

Government advisor and economist Ashok Chakravarti said while the balance of payments was improving and would further improve as the year progressed, there was need to review the foreign currency management from banks.

"When it comes to liquidity and cash, I think we need to be very honest with ourselves. This is a basic problem that emerges out of the nature of dollarisation. It has nothing to do with Zimbabwe. Dollarisation is not a mechanism that solves the cash and liquidity crunches. So to get rid of this issue of how people can access their deposits and for the cash crunch to go away, we need to look at fundamental monetary reform. There is no way out of that," Chakravarti said.

"Until we have that monetary reform, I can assure you that there will be perpetual cash shortages. So this monetary reform especially consists of finding a way of going back to our national currency, which of course requires preconditions."

He said some legislators had also expressed interest in finding out how the central bank and banks managed foreign currency.

"People should not have high expectations for the government to solve this because it is not really within government control.

This is something that has been going on for the past seven or eight years. Fundamental monetary reform is required, so people must not think that because we now have a change of government, the problem is over," Chakravarti said.

At a breakfast meeting last Wednesday in Harare, Finance and Economic Planning minister Patrick Chinamasa said cash supply in the country had gone up by 16%, but the problem was that it was not circulating.

"What I need to point out on this issue is that the future lies on electronic transactions and that applies for all countries. But, there is always room for cash-based transactions which would constitute normally about 10 to 15% of the total value of transactions," he said.

"What we need to address as we go forward is a more efficient circulation of currency, including of course addressing leakages. Currently, there is no efficient circulation of money. There is in the market, cash of up to 16% in the economy but because it is not coming back to us, it becomes a real problem."

He said increased production and exports would improve the cash situation.

In his inaugural speech, Mnangagwa said liquidity challenges had to be tackled head on, adding that depositors had to be able to access their earnings and savings.

However, Confederation of Zimbabwe Industries president Sifelani Jabangwe said the foreign currency situation in the country was showing signs of improvement for manufacturers.

"I think that most of those [measures to support manufacturers] are still just starting to be rolled out, but at least what I can say is that they have managed to keep us going. There are no company closures that have resulted from failure to access currency, but it is just basically a situation of having one's head above the water. We are just getting barely enough to keep going. We are seeing a softening of rates, which I think is an indication that there is starting to be a bit more currency in the economy," he said.

He said he expected the current situation to improve as the year progressed.

- standard

Tags: Mnangagwa, Cash, Crisis,

You May Like These Videos


There are no comments.

Latest stories

Morgan Tsvangirai and the making of a national hero

by Tafi Mhaka | 16 February 2018 | 313 Views

Tsvangirai the legacy

by Daniel Itai | 16 February 2018 | 285 Views

Zuma's demise

by Daniel Itai | 16 February 2018 | 333 Views

Tsvangirai supporters organise red Saturday in honour of him

by Stephen Jakes | 16 February 2018 | 575 Views

Tsvangirai burial set for Buhera

by Staff reporter | 16 February 2018 | 342 Views

Tsvangirai Funeral Update: Khupe deployed to SA

by Nelson Chamisa | 16 February 2018 | 404 Views

Khupe apologises

by Dr Thokozani Khupe | 16 February 2018 | 1000 Views

Mnangagwa, army commanders tensions grow

by Staff reporter | 16 February 2018 | 451 Views

Tsvangirai's death, political phonies and crocodile tears

by Staff reporter | 16 February 2018 | 204 Views

The hypocrisy of Zanu-PF is utterly suffocating

by Brezhnev Malaba | 16 February 2018 | 180 Views

Zimbabwe to mortgage minerals for capital

by Staff reporter | 16 February 2018 | 144 Views

Tsvangirai's death fuels MDC-T turmoil

by Staff reporter | 16 February 2018 | 172 Views

Gukurahundi victims want their voices heard

by Nqobani Ndlovu in Maphisa | 16 February 2018 | 124 Views

Mudede sued over dual citizenship

by Staff reporter | 16 February 2018 | 236 Views

Mnangagwa, Mugabe fallout - Mugabe security further reduced

by Staff reporter | 16 February 2018 | 573 Views

MDC UK & Ireland Youth Statement on the death of Morgan Tsvangirai

by Vusumuzi B Ncube | 16 February 2018 | 207 Views

Momentary celebrity cannot erase Zimbabweans' common sense

by Brian T Kagoro | 16 February 2018 | 196 Views

How to avoid flawed elections in Zimbabwe

by Ibbo Mandaza & Tony Reeler | 16 February 2018 | 196 Views

Chivayo braces for bruising wrangle

by Business Weekly | 16 February 2018 | 220 Views

Obert Mpofu cleared, he is not corrupt

by Business Weekly | 16 February 2018 | 319 Views

Mnangagwa urged to repeal laws that hinder free polls

by Staff reporter | 16 February 2018 | 154 Views

Cheating wife agony

by Staff reporter | 16 February 2018 | 356 Views

Man dumped for preying on maids

by Staff reporter | 16 February 2018 | 248 Views

Sangoma 'steals' wife

by Staff reporter | 16 February 2018 | 182 Views

Highlanders in no rush to spend

by Staff reporter | 16 February 2018 | 134 Views

Bees sting woman to death

by Staff reporter | 16 February 2018 | 143 Views

Busted while servicing pal's hubby

by Staff reporter | 16 February 2018 | 318 Views

Tsvangirai was courage personified

by Conway Nkumbuzo Tutani | 16 February 2018 | 126 Views

Woman runs amok in house fight

by Staff reporter | 16 February 2018 | 137 Views

Student savagely attacked by lover's wife, hired hit men

by Staff reporter | 16 February 2018 | 115 Views

Jilted cop 'impounds' ex-wife's panties

by Staff reporter | 16 February 2018 | 104 Views

Drama as hubby busts wife, lover

by Staff reporter | 16 February 2018 | 200 Views

Desperate fuel thieves arrested

by Staff reporter | 16 February 2018 | 95 Views

Dembare, CAPS match moved

by Staff reporter | 16 February 2018 | 145 Views

Zanu-PF MP sued over child upkeep

by Staff reporter | 16 February 2018 | 91 Views

Blow for Zacc

by Staff reporter | 16 February 2018 | 119 Views