Local banking trends change


Ngoni Chanakira

THE Central African Building Society (Cabs), the country’s largest building society, says banking trends have changed drastically due to the current cash shortage.
G>


Zimbabwe has of late been afflicted by a severe cash crisis which Finance minister Herbert Murerwa says is attributable to cash hoarding, inflation, parallel market activities, negative real interest rates, high bank charges on cash deposits and speculative behaviour.


The cash shortages have disrupted business and economic activities and heavily inconvenienced the general public as well.


The country’s cash situation remains tight despite government announcements that it would improve because they had injected $5 billion worth of Zimbabwe dollar travellers’ cheques into the financial system since their introduction on August 8.


“Cabs has seen a change in banking trends due to the cash shortage,” a spokesperson said. “The number of cheque transactions went up from 11 276 in May to 19 635 in June and up to higher levels for July. This has placed a strain on cheque supplies.”


The Reserve Bank of Zimbabwe (RBZ) on the other hand said with the new measures implemented recently, the situation would change.


Acting RBZ governor Charles Chikaura told businessdigest that as of now it was not feasible however, to determine in precise terms how much of the existing $500 notes had been returned to the banking system, since money constantly flows in and out.


Government annou-nced that a new $500 note would replace the existing $500 ones at the end of this month. A higher denomination note of $1 000 is also pencilled in for month-end.


Government then thre-atened individuals and organisations holding Zimbabwean currency outside the country that if they did not return the cash it would become “worthless”.


“The number of cash withdrawals was only marginally down from 344 227 in May to 284 952 in June,” Cabs said.


“The number of ATM withdrawals over the same period went down from 258 265 to 43 290 due to unavailability of cash in ATMs while the number of point of sale transactions went up from 237 909 to 362 657.”


The building society said in October last year it received a total of $450 million in cash from its bankers.


In May this year however, Cabs received $50 million and in June $280 million.


“Taking the monthly rate of inflation intoaccount these figuresindicate the severityof the cash shortages being experienced by Cabs,” the spokesperson said.


“Exacerbating this shortage of cash is the fact that many normal merchants are not depositing cash in banks or building societies because cash can be sold at a premium. While understanding and sympathising with the inconvenience caused to clients, Cabs is unable to control the cash shortage.”


Murerwa said in a bid to solve the cash crisis government outlawed the repatriation of cash outside Zimbabwe through the gazetting of Statutory Instrument 163 of 2003.


To prevent cash hoarding and unlawful trading in cash, both by traders and individuals, government gazetted Statutory Instrument 171 of 2003 which should ensure accountability of all cash generated and result in the re-channelling of deposits back into the banking sector.