HomeBusiness DigestNo solution in sight to cash crisis

No solution in sight to cash crisis

Jesilyn Dendere

JOSPHAT Chiripanyanga has been queuing for almost two hours at his bank and the hopes of getting any cash are slowly diminishing. Chiripanyanga a doctor

by profession says he has no choice but to hang on until he gets some cash to pay his suppliers.

“I am not leaving this queue until the bank manager tells us that there is no cash,” said Chiripanyanga who says he has been struggling to get cash for four days.

While others are struggling to get cash the security guard at the entrance of the bank is busy making money by charging a small fee for desperate people who want to jump the queue.

Today he is in a mean mood so people have been told to queue three metres away from the entrance.

“For the past three weeks people have been crowding this door, today I want order,” said the guard as he shoves off some clients who were pushing towards the entrance after they suspected that some one had jumped the queue.

Chiripanyanga runs Mabvuku Medical Centre, a surgery in Mabvuku. For him, going to the bank in search of cash has become a daily routine. Although sometimes he is lucky there are times when he goes back to work empty handed.

His suppliers have told him that they no longer accept cheques or RTGS as payment.

“I do this everyday, I come to the bank everyday. This is taking the time that I’m supposed to use attending to my patients,” Chiripanyanga said.

“I have been doing this since November when the cash crisis started and it hasn’t been easy for me to run my business in such an environment.”

He says the mere $100 million that he gets from the bank is not enough to cater for the daily needs of his surgery.

“My suppliers deliver drugs on a daily basis, we order drugs, equipment and my staff also need money at the end of the month and there are bills that need to be paid. All these have to be squeezed into the $100 million and that is impossible.”

Chiripanyanga is not alone in the search for cash. Brian Kahungwa, a father of five, has been in the queue for the past four hours.

“Next week is going to be a nightmare for most parents like me because I will need cash to pay fees for my four children at school,” said Kahungwa.

Kahungwa said even after the reduction of school uniform prices, the money he is getting from the bank is still not enough. A set of a primary school uniform is selling for $47 million yet he is getting $50 million from the bank.

“How many times do I have to go the bank before schools open in order to make sure that every child has everything? For the youngest in Grade One, I need $98 million for the jersey, $49 million for the dress and $14 million for a pair of socks. Then there is the raincoat which is selling for $35 million and a pair of school shoes now going for $18 million on the black market.

Under normal circumstances Kahungwa could have used his ATM card, cheque or RTGS transfers but this is not possible because he is buying most of the goods from the informal market where they are cheaper. Even if he finds the uniforms on the formal market he cannot use a cheque because most shops accept cash only.

“How many Indian shops have swipe machines?” asks Kahungwa. Indeed very few shops in the downtown area accept cheques as a form of payment.

The saddest part of Kahungwa’s story is that his problems look set to continue because the cash crisis does not seem to be coming to an end. In fact economic analysts are warning that the situation could worsen when civil servants get their increased salaries in a week’s time.

Analysts this week said the ongoing cash shortages will remain a permanent feature as long as inflation continues to gallop.

With inflation at over 14 000%, the value of the dollar has been deteriorating forcing people to move around with large amounts of cash to purchase basic goods.

Three weeks after the Reserve Bank governor, Gideon Gono, introduced a new set of bearer notes — $250 000, $500 000 and $750 000 — some people are yet to get their December salaries.

“The government has underestimated the real inflation and the worth of the dollar, at the moment it is worth only a fraction of what they think it is,” said a senior finance lecturer at the National University Science of Technology.

Economist, John Robertson, said the cash shortages could be related to the fact that the value of notes is so small such that you need more of them to buy anything.

He said the cash crisis could also be attributed to the government’s belief that the amount in circulation is more than enough.

“People need more money than they (government) can print,” Robertson said.

David Mupamhadzi, an economic analyst with the Zimbabwe Allied Banking Group, said the problem of cash shortages lies in the loss of the purchasing power of the dollar.

“The fundamental issue is the hyperinflationary environment in which the economy is operating, this has led to the value of the dollar losing its purchasing power,” Mupamhadzi said.

Mupamhadzi said cash shortages were reflective of informalisation, parallel market deals and the loss in popularity in conventional methods of paying for goods and services since most goods are now found on the informal market.

“Cash requirements on a daily basis are now high and they continue to rise thus people continue to spend hours in bank queues looking for cash,” said Mupamhadzi.

Economic analysts have said it requires more money to buy one commodity hence the need for more money to be released onto the market.

“The dollar per commodity has fallen far beyond reasonable levels,” said an economic analyst with a commercial bank in Harare who says the cash shortages are not a new thing.

“The money in circulation is far too little for cash transactions that are taking place in the economy.”

The $50 million that is being offered to individuals is not enough to cover food, transport, rent, and other expenses, thus there is little cash supporting the underlined transactions.

“The short-term measure in addressing the cash shortages could be the central bank printing more notes of higher denominations for the convenience of consumers while long term measures require the nation to address the issue of inflation without playing the blame game because people are wasting production hours in bank queues,” Mupamhadzi said.

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