Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-categories.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579

Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-archives.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579

Deprecated: File /var/www/wp-content/plugins/amp/includes/widgets/class-amp-widget-text.php is deprecated since version 2.0.0 with no alternative available. in /var/www/wp-includes/functions.php on line 5579
Introduction Of Worthless Bond Notes Currency Spark Panic Withdrawals in Zimbabwe - Zimbabwe Today
Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 81

Introduction Of Worthless Bond Notes Currency Spark Panic Withdrawals in Zimbabwe

Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 71

PANIC cash withdrawals, sparked by fears over the impending introduction of bond notes by the Reserve Bank of Zimbabwe, have affected many banks in the country, with most of them now struggling to service depositors.

The withdrawals have seen banks further reducing the maximum daily withdrawal limits from $300 and $100 to between $20 and $100.

Last month, RBZ governor John Mangudya said he would proceed with the introduction of bond notes despite resistance from the majority of Zimbabweans, who see the new currency as an attempt to retrieve the banished Zimbabwean dollar.

The dollar was officially retired last year having been elbowed out of the scene by the advent of the multicurrency regime seven years ago.

Mangudya said bond notes would be introduced next month and by December, $75 million worth of the surrogate currency would be in circulation.

Executives in the banking sector said few people were coming to deposit money and the inverse was true for withdrawals.

This, they said, meant that banks had to wait for deposits first before allowing any withdrawals.

“Very little money is coming to the banking sector from the depositors. People are bringing in money into the banks only to make critical payments,” one executive said.

“The demand for cash is high but the deposits are very little. For instance, one branch might receive $3 000 in deposits the whole day and that means the money cannot be sufficient for all the depositors that will be queuing outside the banking hall seeking withdrawals.”

Another executive said banks were not holding onto the cash but politicians were taking money outside the country during their numerous trips.

The central bank earlier this year said $1,8 billion was externalised in 2015, a development that worsened Zimbabwe’s liquidity challenges.

This necessitated stringent measures that included restrictions on the amount of cash that can be taken out of the country at any given time to $1 000 per individual.

Responding to questions from Standardbusiness, Bankers Association of Zimbabwe president Charity Jinya said a number of factors had resulted in the current cash shortages. She said the RBZ had introduced various measures to address the problem.

“The RBZ has reduced cash export thresholds for travellers, government is now restricting unnecessary imports, while banks have also streamlined cash withdrawals and are encouraging the use of electronic and digital payment platforms,” Jinya said.

She said recent statistics from the central bank showed that annual broad money supply growth rate had increased by 1,71 percentage points to 14,84% in July 2016, from 13,13% in June 2016.

Total banking sector deposits stood at just over $6,12 billion as at July 31 compared to $5,67 billion in March 2016, she said.

Mangudya said the $200 million ceiling for bond notes would only be attained when exports reached $6 billion. Exports were $1,12 billion in the first half of the year. Exports constitute 60% of liquidity flows into the country.

The mobile money platform, which has been touted as the anchor to the financial inclusion thrust by virtue of its wide network, has been adversely affected as subscribers fail to get cash from agents.

The cash back facility at most retail stores has also been affected, with supermarkets drastically reducing the amounts they give out to customers.

Food World marketing and sales director Tendai Chisvo said the retail chain had reduced its cash facility to 1:1 following a surge in the demand for cash.

“The cash challenges have increased and of course, that is the situation on the ground,” he said.

“The cash shortages have increased and we are trying to meet every aspect. We have reduced our cash back facility since end of September to 1:1 as we are trying to meet all our cash requirements.”

Retail giants such as TM pick n Pay and Bon Marché were giving cash backs of about $50.

Spar Zimbabwe managing director Terence Yeatman said there had been an increase in point of sale transactions and a decrease in the daily intake of cash at their stores, adding that they had not changed their cash back facility.

“Our cash back policy has not changed; spend $30 and get $100 or spend $60 and get $200. This is, however, determined by the amount of cash available in that specific Spar store for that day,” he said.

Bankers say the central bank was partly to blame for the cash crisis after tinkering with nostros balances. In 2014 Mangudya reduced the nostro balances to 5% from 30%. Two years later, the bank is looking for $545 million from regional banks to fund the nostros balances.

Mangudya said the nostros were not static in nature as the funds would be used when payments had to be made.

Countries that have adopted the dollar as their currency such as El Salvador, Panama and Ecuador among others have faced challenges such as the cost of importing coins.

Finance minister Patrick Chinamasa has in the past said Zimbabwe had become a fish pond where people would come and get the dollar which is used as a reserve currency the world over.

Check Also

Zimbabwe: Young Women Rallied to Participate in Economy

Notice: Undefined variable: fm_appid in /var/www/wp-content/plugins/facebook-members/facebook-members.php on line 71
By Rumbidzayi Zinyuke First Lady Amai Auxillia Mnangagwa has challenged young women to actively participate …

This function has been disabled for Zimbabwe Today.