Pride Mahlangu Bulawayo Bureau
THE Bankers’ Association of Zimbabwe (BAZ) says demand for cash remains higher than supply as clients do not deposit their money back into the system.
Long winding queues persist in banking halls across the country despite injection of more cash into the system by the Reserve Bank of Zimbabwe (RBZ).
Last week, Treasury revealed that the central bank injected an additional $20 million of notes into circulation to ease the cash crisis.
RBZ has said it will soon introduce higher denominations of $10 and $20 notes.
The recommended cash levels for any economy are 10 to 15 percent of money supply, which in Zimbabwe stands at about $19 billion.
This means the country requires at least $2 billion in physical cash, yet about $720 million is in circulation.
BAZ president, Mr Webster Rusere, told our Bulawayo Bureau that while the cash drip-feed process was progressing well, improvement was imminent over time. He admitted bank queues persist and that these could not disappear overnight.
“The demand for cash far exceeds the supply. Banks have had to rely on allocations from Reserve Bank of Zimbabwe only as customers are not depositing cash back into the banking system,” he said.
“Banks have to ensure clients are given an equal opportunity to access the available cash. We are not seeing much in the way of deposits and denominations of less than 50 cents are finding little acceptance and apparently the market is rejecting these.
“While some deposits were received by banks, given the high demand and the fact that very little if any cash is being deposited into banks this situation can only improve as confidence and greater acceptance of electronic transfers by all players of the market is witnessed.”
Mr Rusere explained that as each bank receives cash allocation from the RBZ, it then allocates to branches and ultimately to customers.
“The withdrawal limits are subject to guidelines from the Reserve Bank of Zimbabwe and currently withdrawal limits are set at $300 per week per customer,” he said.
The BAZ head commended the country for quickly embracing digital banking platforms such as mobile money, point of sale (cards), internet banking and RTGS transfers encouraged clients to use these channels rather than relying on cash for their purchases.
Economists say while the RBZ was right to increase cash in circulation given the high demand, it would take time before cash queues start to subside.
Since the introduction of new notes and coins in November, about $120 million has been injected into circulation. The RBZ introduced new $2 coins and $2 and $5 notes following a surge in demand for cash in the informal sector, which operates largely on a cash basis or offers discounts for cash.
The central bank has stressed that low denomination coins have not been decommissioned and can be exchanged at banks across the country for bigger denominations of notes or coins.