AS politicians against Reserve Bank of Zimbabwe bosses draw daggers, the central bank’s acting governor Charles Chikaura says it has issued $5 billion worth of Zimbabwe d
ollar traveller’s cheques since their introduction on August 8.
The RBZ chief says notwithstanding these injections, the cash situation in the economy, however, still remains tight, but is expected to ease as the new measures announced by government are implemented.
Government announced that a new $500 note would replace the existing one at the end of September.
Individuals and organisations holding Zimbabwean currency outside the country’s borders were given until this Sunday to return the notes.
“As of now, it is not feasible, however, to determine in precise terms, how much of the existing $500 notes have been returned to the banking system since money constantly flows in and out of the system,” Chikaura told businessdigest in a written response to questions this week.
The shortage of cash, a first of its nature in the history of the financial services sector, has negatively affected confidence and service delivery in the sector.
Long queues are now the order of the day at banks and building societies countrywide especially in Harare and Bulawayo where customers begin waiting for their cash from as early as 5am to get sums as little as $5 000 – the equivalent of five loaves of bread.
VIP customers accustomed to receiving $100 000 in cash daily while sipping coffee or tea have now had their allocation cut to a mere $10 000 per visit.
Breast-feeding mothers and riot police, standing side by side, either awaiting cash or, in the case of the latter, crowd trouble, have now become a norm in Harare’s First Street Mall where the majority of the financial institutions are located.
“The Reserve Bank of Zimbabwe has continued to inject cash into the economy,” Chikaura said. “In addition the bank has also issued $5 billion worth of Zimbabwe dollar travellers cheques, since their introduction on August 8. Notwithstanding these injections, the cash situation in the economy, however, still remains tight, but this situation is expected to ease as the new measures announced by government are implemented.”
Bankers and politicians have lambasted the RBZ saying the central bank had waited too long before trying to solve the cash fiasco.
They said, furthermore, the traveller’s cheque system had been introduced haphazardly without merchants and customers knowing exactly how to utilise the facility.
Prominent banker and financial consultant Andy Hodges said more education was needed before the cheques were dished out to the unsuspecting public.
He said the merchants were surprised about the decision because they were facing problems especially as regards change.
“How does one change a customer with a $100 000 cheque wanting to buy goods worth $40 000?” he asked. “This system might cause more problems than it is solving. There should have been more education on how to use the cheques.”
Trust Holdings Ltd chairman Tichaendepi Masaya, whose group’s net profit for the period ended June 30 stood at a whooping $15,1 billion, said it was imperative for “authorities” and industry players to urgently put in place measures to overcome this crisis, and avert “serious dislocation of economic activity”.
Chikaura said: “Parallel markets for foreign exchange develop whenever demand outstrips supply, particularly if the official price does not respond accordingly. Through various exchange control measures and directives, the Reserve Bank has continued to intensify monitoring and surveillance of all foreign exchange transactions by authorised dealers, to ensure that foreign exchange receipts from export of goods and services flow through official channels, and that the foreign exchange earned is fully accounted for. These efforts are also aimed at eradicating banks’ involvement in parallel market activities.”
The RBZ boss said as regards parallel market activities that take place between individuals outside the banking system, it should be understood that prosecution of such individuals was a collective responsibility involving all the “law enforcement agents”.
He said these agents included the ZRP, National Economic Conduct Inspectorate (NECI), and the Zimbabwe Revenue Authority (Zimra).
“The long-term solution to the problem of foreign exchange shortages and the parallel market, however, lies in the implementation of a consistent and comprehensive set of macroeconomic policies, aimed primarily at promoting export growth, so as to ensure that the economy, realises adequate foreign exchange,” Chikaura told businessdigest.
He said speculators had taken advantage of the resultant crippling foreign exchange shortages to continuously depreciate the exchange rate, for desperate importers utilising the parallel market.