Zim faces salt shortages

HARARE - Zimbabwe is facing serious salt shortages after one of the country’s largest suppliers, Botswana Ash (Botash), said its operations are being affected by a debilitating cash crisis.

Botash general manager corporate services Victoria Lekoma said her company’s trade deals have been severely affected by the current liquidity challenges that Zimbabwe is experiencing.

“Cash crisis has affected volumes of our transactions and suppressed the movement of goods (processed sodium chloride and soda ash) from Botash into Zimbabwe for the past year or so,” she said.

Zimbabwe adopted a basket of currencies dominated by the highly-valued United States dollar in 2009.

However, the country has been witnessing an acute liquidity crunch due to a widening trade deficit and lack of production.

Long queues at banks have become the order of the day to buttress the liquidity crunch and cash crisis that the country finds itself in.

Financial institutions have resorted to limiting daily withdrawals to a paltry $50 per day while other banks do offer far less daily.

The cash shortages have also affected international trade as companies operating in Zimbabwe are struggling to service their foreign obligations as well as procure raw materials.

Last month, British American Tobacco Zimbabwe said it was failing to pay over $5 million in dividends to its offshore major shareholder, due to cash challenges.

The liquidity situation has also resulted in mobile money companies refusing to accept dollar payments for pay television platform, DStv while some banks are also now restricting payments for the service.

This comes as Zimbabwe has started to tighten the screws on “excessive” spending and use of scarce foreign currency

Zimbabwe is $1,6 billion in arrears to the World Bank and African Development Bank, outstanding debt that prevents Harare from securing any extra financing from the two institutions or the International Monetary Fund.

Economic experts said the country, which was regarded as one of Africa’s most promising prospects at independence from Britain in 1980, was offering a wrong diagnosis to its cash crisis by introducing bond notes.

“The bond notes are just a short term solution as the problem of liquidity will continue to resurface in the long term,” economic commentator Francis Mukora said.

“It is important that monetary authorities return to the basic tenets of economic management.

“Cash shortages or illiquidity is not a challenge on its own, but a derivative of underlying economic implosion.

“This is not the time to be looking at solutions for the cash crisis. It is time to look for solutions for the economic problems bedevilling the country so that liquidity is guaranteed in the short to long term,” he said.

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