AS the cash crisis persists, banks are refusing to honour corporate cheques in a move that could plunge many businesses into paralysis, it emerged this week.
The Reserve Bank of Zimbabwe this week issued a directive prohibiting banks from cashing company cheques.
A central bank circular to banks also said companies would be required to use newly introduced travellers cheques, which have failed to solve the crippling cash shortage which started three months ago.
According to the new regulations, companies will make an application to the bank, which will then be forwarded to the central bank for approval.
Banking officials said the process would take at least a month.
Analysts immediately shot down the move as counter-productive.
Economist Eric Bloch says the new regulation will create more chaos in the business sector as companies would opt to use the parallel market to access local currency.
“The regulation means that companies will not be able to pay wages which indirectly impacts on efficiency and production,” Bloch said. “Businesses like architectural and law firms would grind to a screeching halt,” said Bloch.
“It is a catastrophically unwise act on the part of the central bank. It is high time we stopped operating on the basis of crisis mismanagement and turn to crisis management. These reactive measures will sink the economy.”
Analysts say the move indicates government’s evident failure to solve the crisis.
“It is shocking that the same government which days ago was calling for business to use cheques has now rendered every cheque transaction between companies useless,” said an economist from the Zimbabwe Economic Society.
The Commercial Bank of Zimbabwe, Trust Bank and First Bank confirmed that they are under strict instructions from the Reserve Bank not to accept company cheques.
“With effect from Monday we have not been cashing company cheques. We are only dealing with personal accounts,” said an official from First Bank.
Economists say the move will erode the already waning deposits on which banks are depending for a recovery. They said companies would demand cash from their clients, which they will trade on the flouring parallel market.
“The government is not solving the crisis. If anything daily deposits shrink as companies try to avert the bureaucracy associated with corporate cheques,” said an analyst with a local broking firm. Business profits would also receive a knock, a situation commentators say is likely to pull the economy further down an already slippery slope.
The cash shortage is the latest on the list of Zimbabwe’s growing shortages that economists say is the result of flawed policies and mismanagement.