ZIMBABWE’S crippling cash shortage is deteriorating to the point where SA companies operating there are not getting their money out. At a personal finance level, Zimbabwean households are battling to pay their creditors on time – if at all. Zimbabwe’s Steward Bank has suspended the Zimbabwean subsidiary of South African Naspers’ pay TV division Multichoice, citing unavailability of foreign currency.
This is a sure sign that dollar shortages are worsening in SA’s northern neighbour. In April Zimbabwe proposed to enlist cows, goats and sheep in an attempt to revive its credit-starved economy after the ruling party proposed to make livestock eligible for backing bank loans. According to laws introduced in Parliament, borrowers would be allowed to register “moveable” assets as collateral at a central bank registrar.
The bill would require commercial banks to accept them as security for credit. Patrick Chinamasa, the finance minister, told MPs that the assets would “include any type such as machinery, motor vehicles, livestock, and accounts receivable”. But bankers said they were concerned about the definition of assets, most of which are susceptible to rapid depreciation in value. Farmers who seized commercial farms after Mugabe introduced controversial land reforms nearly two decades ago still face difficulties using the land as collateral because the title deeds remain with the original owners.
Now most Zimbabwean Multichoice subscribers will likely be disconnected in terms of its policy. A source in Zimbabwe said the cash shortage had been around a long time. “Banks don’t have the money to pay South African companies. Clever Zimbabweans are now paying theirs satellite TV bills in South Africa,” the source said.
Experts say it is likely that other creditors are getting the same treatment, making it a difficult climate in which to do business. Local banks have been forced to limit withdrawals due to cash shortages while importers face long delays in paying for goods they bring in, forcing some businesses to buy dollars on the parallel market. Steward Bank, a unit of mobile telephony operator Econet Wireless, said it was suspending payments to Multichoice, Africa’s largest pay TV company, which is popular in Zimbabwe.
“To assist in effective allocation of foreign currency reserves at this critical time, we advise that with immediate effect, the bank has suspended digital satellite television payments for all account classes except premium,” the bank said. Last year in May, the central bank set priorities for imports, imposed limits on cash withdrawals and introduced a bond note currency in a bid to ease the acute shortage of money.
Multichoice would not make an official comment yesterday on whether it would disconnect non-payers. – with Reuters