Cash crisis: Government targets companies

SOMALIA BANKING FIRST ATM

HARARE – Under-pressure Finance minister Patrick Chinamasa has promised severe punishment for companies and other traders who are not banking money — accusing them of fuelling the country’s cash shortages which have worsened in recent days.

This comes as banks have reduced further their daily withdrawal limits, in addition to suspending dispensing money through Automated Teller Machines (ATMs).

Speaking in Parliament on Thursday, Chinamasa said some organisations were wantonly disregarding the Bank Use Promotion (and Suppression of

Money Laundering) Act — which compels corporates to bank their surplus cash on a daily basis when banks are open for business.

“In Zimbabwe, the opposite is true and as a result, we have noted with great concern the deliberate disregard to the laws of the land by these traders.

“Such unscrupulous traders should not continue to enjoy the freedom of being in the reserved sectors without compliance. The net is closing in on those players who continue to disrespect our laws.

“To date, three traders have been hauled before the courts for not banking their sales proceeds, in line with the laws of the country. They have all pleaded guilty to the offence and they now await their sentences after the Easter holidays,” Chinamasa told gathered lawmakers.

“Non-banking of cash by traders is also a major cause of cash shortages and queues for cash at banks. This indiscipline is counterproductive and cannot continue to be tolerated.

“Money is like blood, it needs to circulate for the economy to survive. Money should be circulating in order to deal with queues at the banks.

“Banks find themselves in a difficult position where they are compelled to ration cash withdrawals in order to meet their customers’ demand.

“Banks have, therefore, continued to explore pragmatic measures to meet their customers’ demand for cash,” he added.

The biting cash shortages have forced banks to slash further withdrawal limits, with most of them now disbursing a maximum of $30 dollars a day, down from their usual $100 — while those that had capped the maximum withdrawal limit at $500 a week have pulled this back to $200.

The cash shortages are also continuing to worsen despite the recent opening of the tobacco marketing season.

The Reserve Bank of Zimbabwe (RBZ) increased the bond notes withdrawal limit from a maximum of $150 a week to $100 per day, and $300 per week towards the end of last year.

It has so far injected $102 million worth of the surrogate currency into the system.

In the meantime, there are growing fears that the country’s economy may soon hit the disastrous lows of 2008 — as bond notes continue to lose their value against the United States dollar, with the coveted greenback now almost completely unavailable on the open market.

At the same time, economists have told the Daily News that poverty levels in the country are skyrocketing, with average incomes now at their lowest levels in more than 60 years — and with more than 76 percent of the country’s families now having to make do with pitiful incomes that are well below the poverty datum line of more than $500.

In his annual birthday interview with the ZBC in February, President Robert Mugabe unwittingly confirmed Zimbabwe’s worsening rot when he revealed that he too was keeping his money at home, fearing bank failures.

“They (ordinary Zimbabweans) carry those earnings into their pillows and briefcases back home and hold funds back home and become reluctant to release them. Then the banks will not have any resource and will continue to talk of illiquid banks in the system.

“That is what has happened. Dzimba idzi dzizere nemari (Many homes are full of cash). Tikati kumapurisa nemasoja (If we instruct the police and soldiers to) go house by house and dig for the funds that are being hidden there . . . You will be guilty and I will be guilty.

“I don’t know who will not be guilty here . . . Dzimwe nguva ukaona tumari twako wotya kuti aah ndikanoisa uko kuti ndizonoitora mangwana hapana (If you have savings you will be afraid of depositing them in the bank because tomorrow you may not get that money).

“So you tend to keep it. It’s not your fault . . . It’s the fault of a system that has not yielded enough cash. Mind you, the (American) dollar is not our currency,” Mugabe said.

Mugabe and his warring ruling Zanu PF, in power since Zimbabwe’s independence from Britain in 1980, stand accused of turning the once thriving local economy, which at one time was regarded as the bread basket of Africa, into a much-derided basket case. – Daily News

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