Govt gazettes new cash law

A STATUTORY instrument released by government last week says it is now illegal for companies and individuals to do cash transactions worth more than $250 million.

Under Statutory Instrument 21/2008 of the Bank Use Promotion and Suppression of Money Laundering Act released last Friday, it is also illegal for traders and parastatals to hold cash in excess of $500 million for more than 24 hours from the last trading hour.

It also prohibits companies from settling trade debts above $250 million in cash.

The Statutory Instrument defines holding cash in excess of $500 million as “unlawful hoarding of cash”. Licenced money lenders are also not allowed to keep more than $500 million. Analysts have said the new law shows that the government is still in denial about the real situation in the economy.

At the current prices $250 million can only buy ten litres of fuel. Many basic commodities cost far more than $250 million. Using the prices for this week $250 million can only buy a two-litre bottle of cooking oil ($100 million), a 20kg bag of mealie-meal ($110 million) and a bar of soap ($30 million). For companies the amount is not enough to buy stationery.

The Zimbabwe National Chamber of Commerce (ZNCC) has described the Statutory Instrument as a futile attempt by the government to control the liquidity position of business.

“I don’t know why government overburdens itself by creating extra work for themselves,” said ZNCC president Marah Hativagone.

“It is like a dog chasing its tail,” she said.

Hativagone said the amount was not enough for most companies that are now paying transport fares for their employees daily.

For instance a company employing 60 people requires a minimum of $600 million per day to transport employees to and from work.

Bernard Mpofu

 

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