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 donâ€™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.