Scramble for bank accounts

Ongoing cash shortages in Zimbabwe are forcing many companies which used to pay their employees in cash to resort to bank deposits.

BY TATIRA ZWINOIRA

Like individuals, companies are now accessing very little cash from banks and as a result they are compelling their employees to open bank accounts through which they can receive their wages.

Farm and domestic workers who used to be paid in cash are among the employees that have now been asked to open bank accounts.

This has seen a surge in the demand for new accounts in the banking sector.

The Financial Clearing Bureau (FCB) in its second quarter report said the liquidity shortages had forced people without bank accounts to open accounts.

FCB managing director Alan Goodrich said the only way for companies to pay or receive funds was often through electronic means which made them unable to give employees hard cash.

“Before the crisis, 90% of our employees were paid in cash as this was their preference,” he said.

“This has become simply impossible, so staff need to open bank accounts in order to be paid.

“In the agricultural sector, which represents about 70% of the workforce, I have met with farm owners who similarly now require their labourers to open accounts if they expect to get paid.

“I suspect most industries and other economic sectors have experienced similar developments,” Goodrich said.

“Even from a personal perspective, we now require our domestic staff at home to open accounts in order to get paid.

“We believe this phenomenon is not only restricted to the formerly employed, but also the informal sector.

“Likewise with small businesses (SMEs) accepting electronic payments have become a necessity of survival given the shortage of cash.”

The shortage of cash, coupled with a surge in plastic money usage, which has seen an average growth of 4,2% since mid-June, has led most companies to push employees to open bank accounts.

For companies to receive more cash than what they have, significant deposits must be made of which an average of 80% could be withdrawn, an accountant with a manufacturing concern said.

Employers’ Confederation of Zimbabwe executive director John Mufukare said this new phenomenon was beyond the control of employers.

“Right now most banks are releasing between $200 and $300 per day while some are even giving $100 a day to companies,” he said.

“So obviously paying people in cash is no longer an option. Even if you were to go to the bank every single day and get your maximum [withdrawal limit], you would still not be able to raise your full payroll.

“I can confirm that employers have been asking employees to open bank accounts so that they transfer salaries into bank accounts.”

Mufukare said besides the little cash given at the banks, queuing for the money cost businesses productivity due to the amount of time it would take for an employee to get the money.

Zimbabwe National Chamber of Commerce chief executive officer Christopher Mugaga also confirmed this new trend, saying “it is simply as true as that”.

When it comes to domestic workers, employers also use mobile payment platforms such as NetOne’s OneWallet, Telecel’s Telecash or Econet’s EcoCash, the last one being the most preferred.

Tenants are also now paying monthly rentals through bank transfers.

The second biggest bank by deposits, Cabs, however, said new accounts were being opened at a fairly steady rate.

“We continue to open new accounts on a fairly steady basis and I cannot think of any particular spike. I think there has been a steady rate of opening new accounts.

“We have had an upsurge in people trying to find ways of paying staff in other ways than cash.

“There is a huge move in volumes in terms of people using cards to purchase goods that has more than doubled in three months,” managing director Simon Hammond said.

While most banks have resorted to plastic money, others such as Barclays are giving South African rand to their clients on top of the United States dollar.

“Barclays Zimbabwe currently operates within the multi-currency system which has eight other acceptable currencies. In line with this, we are providing customers with South African rand through our automated teller machines,” Barclays Zimbabwe managing director George Guvamatanga said.

“This is aligned to efforts by the Reserve Bank of Zimbabwe to promote the use of multi-currencies through various initiatives that make it easy for customers to access the different currencies.”

Analysts say the cash withdrawal limits for companies and individuals will drive the use of plastic money and in the process accelerate the central bank’s financial inclusion thrust. – The Standard

Related Posts
CABS in $20.75 million surplus
Old Mutual Zimbabwe’s Central African Buildings Society (CABS) doubled its net surplus to $20.75 million from $10.63 million last year, on the back of improved loan recoveries amid restricted lending. “This ...
READ MORE
Bank workers picket BancABC offices
HARARE, – Banking workers on Tuesday picketed the BancABC offices in Harare’s Central Business District, protests over its treatment of retrenched former employees. BancABC dismissed 75 employees in 2015, taking advantage ...
READ MORE
CBZ H1 profit falls 13pct, paints gloomy outlook
HARARE,– CBZ Holdings on Thursday reported a 13 percent decline in profit after tax to $11,9 million in the six months to June as the group’s business units recorded a ...
READ MORE
HARARE,– The planned October introduction of a token currency in Zimbabwe, called bond notes, has stoked fears of the return of a much-loathed local currency by stealth. Zimbabweans have nightmarish memories ...
READ MORE
Plastic money use in Zimbabwe surges 150 percent
The use of plastic money has increased by 152 percent since the Reserve Bank of Zimbabwe (RBZ) announced measures to encourage the use of credit and debit cards as a ...
READ MORE
SOMALIA BANKING FIRST ATM
Bulawayo,– Depositors in the country’s second largest city were shocked this Thursday when they woke up to find Automated Tellor Machines (ATM) belonging to one of the biggest banks in ...
READ MORE
Rand breaches R14/$ barrier ahead of interest-rate decisions
THE rand continued firmer against the dollar late on Monday, breaching the R14/$ level as investors awaited Thursday’s Reserve Bank’s repo-rate decision. The US Federal Reserve and Bank of Japan central ...
READ MORE
US inflation retreat clouds Fed rate outlook
The US inflation rate retreated in July, in a further sign of the benign price pressures that have allowed the Federal Reserve to leave its interest rates policy unchanged all ...
READ MORE
Canary wharf skyline
LONDON - Four of the world’s biggest banks have teamed up to develop a new form of digital cash that they believe will become an industry standard to clear and ...
READ MORE
Foreign banks tighten screws on Zimbabwe
INTERNATIONAL banks are terminating working relations with their local counterparts, in a move that will affect the importation of cash and payments to foreign suppliers. BY VICTORIA MTOMBA Patrick-Chinamasa3 In his mid-term fiscal ...
READ MORE
CABS in $20.75 million surplus
Bank workers picket BancABC offices
CBZ H1 profit falls 13pct, paints gloomy outlook
Zimbabwe is already printing money
Plastic money use in Zimbabwe surges 150 percent
Outrage As Top Bank’s ATMs Churn Out Rands
Rand breaches R14/$ barrier ahead of interest-rate decisions
US inflation retreat clouds Fed rate outlook
Big banks plan to coin new digital currency
Foreign banks tighten screws on Zimbabwe

Arts & Entertainment

mary-j-hillary
Arts & Entertainment

Mary J Blige mocked on Twitter for serenading Hillary Clinton

29th September 2016 Staff Reporter 0

R’n’b singer Mary J Blige has inadvertently become the butt of jokes after serenading presidential hopeful Hillary Clinton. The No More Drama songstress burst into song in a preview for her sit-down with the Democratic […]

Singer Bruce Springsteen performs with the E Street Band during his concert in Cape Town, in this January 26, 2014 file photo. REUTERS/Mike Hutchings/Files
Arts & Entertainment

Bruce Springsteen becomes a best-selling author before he’s even been published

29th September 2016 Staff Reporter 0

It was Bruce Springsteen’s elated feeling after performing at the Super Bowl halftime show in 2009 with the E Street Band led him to write about his experiences. Seven years later, the iconic musician had […]