Stressed banks weep over cash shortages

HARARE - Bankers yesterday broke their silence over the country’s worsening cash shortages — confirming in the process that even bond notes are disappearing from the formal market, amid concerns that the surrogate currency is now being traded in neighbouring countries by unscrupulous dealers.

The acute shortage of both bond notes and the much-coveted United States dollars on the market comes as jittery ordinary Zimbabweans and businesses are increasingly fearful that the dying local economy is hurtling towards the debilitating lows of 2008, which saw shops running out of goods due to world record hyper inflation.

Addressing delegates yesterday, on the second day of the Financial Markets Indaba being held in Harare, Barclays Bank Zimbabwe managing director George Guvamatanga said bond notes had vanished from the local market and were now big business in neighbouring countries.

“It’s not yet established, but there could be more bond notes at Park Station in South Africa, and in Botswana, Zambia and Mozambique than we have here in Zimbabwe.

“Someone realised there is an opportunity to sell the bond notes to Zimbabweans living outside the country, who then don’t have to come here and queue to withdraw their money from banks.

“At the moment, it’s easier for us at Barclays to give United States dollars than to give bond notes,” Guvamatanga told transfixed delegates.

“There are lots of Zimbabweans living outside the country and they need the bond notes, just as we want to use them here,” weighed in Bankers Association of Zimbabwe president Charity Jinya.

Despite authorities injecting more bond notes into the market, and recently increasing their weekly importation of United States dollars by 50 percent, the government continues to battle to stem the country’s severe cash shortages by desperate Zimbabweans who are besieging over-stretched banks as they despairingly try to withdraw their money.

The disappearance of the country’s surrogate currency from the market has also often forced banks to give desperate Zimbabweans their cash in sackfuls of coins.

It has also seen banks limiting the amount of money both individuals and companies can withdraw, sometimes to as low as $20.

Despite the aggressive push by the Reserve Bank of Zimbabwe (RBZ) to promote the use of plastic money and mobile platforms, as part of measures to promote a cashless society, banks have been witnessing rising demand for cash.

RBZ governor John Mangudya has also blamed the shortages of cash to externalisation and the spiriting away of dollars and bond notes by foreign currency dealers from the formal market.

“There is a lot of indiscipline in this economy. There is a thin line between indiscipline and lack of confidence. People should learn to bank their money and no one should trade in foreign currency if they are not registered.

“The bank, in close co-operation with the police and Zimra, has stepped up operations to deal with that malpractice. It is such indiscipline that has crept into our society that needs to be addressed to enhance the efficient circulation of money in the economy.

“It is against this background which has necessitated the bank to establish a hotline or whistle blower facility as a national approach to enhance compliance with the rule of law,” Mangudya said.

In previous interviews with the Daily News, economists have also warned that the country is headed for a major crisis and that the disappearing bond notes are indicative of an economy “in deep distress”.

“The fact that it is so difficult to get money out of banks also makes people reluctant to put their money into their banks.

“With 10 million Zimbabweans each carrying a few bond notes in their pockets, wallets or handbags, 10 million times that number can easily add up the total amount of bond notes in issue,” veteran economist John Robertson told the Daily News fortnight ago.

Another economist, Vince Musewe, also said the limits that had been placed on cash withdrawals were discouraging people from banking their money.

“Because of limits on cash withdrawals, there is no incentive to bank money. So, for example, retailers would rather hold onto their cash.

“The informal sector is not banking either, so very little is going back to the banks, hence the worsening shortages.

“In the case of US dollars, nobody banks them anymore. Huge sums are sitting outside the banking system.

“You then add illicit leakages of export revenues which do not come back to country and you can then easily see the magnitude of the crisis,” Musewe said.

Last month the International Monetary Fund (IMF) also noted that bond notes had failed to solve the country’s deepening economic crisis, further calling for comprehensive reforms.

“Zimbabwe is in a very, very difficult situation, as you know. There is a limited amount of foreign exchange inflows coming in and no monetary policy tool.

“So, it’s very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces,” IMF director for the African Department, Abebe Aemro Selassie, said.

Zimbabwe is deep in the throes of a debilitating economic crisis which has led to horrendous company closures and the consequent loss of hundreds of thousands of jobs.

At the same time, economists have said that poverty levels in the country are skyrocketing, with average incomes now at their lowest levels in more than 60 years — with more than 76 percent of the country’s families now having to make do with pitiful incomes that are well below the poverty datum line.

This also comes as Zimbabwe has now been officially ranked as the poorest country in Africa.

Comments (12)

WHAT WOULD SOMEONE LIVING OUTSIDE THE COUNTRY DO WITH THE BOND NOTES THERE? THEY DONT BUY ANYWHERE ELSE IN THE WORLD! Doesnt make sense. Isu kuSingapore hatiendi nemaBond isu.

Bona Mugabe - 20 May 2017

Come on Mangudya.Do you think we have short memories ?When you introduced the newsprint money you said this was meant to curb externalisation?Now what are you saying?We told you that you will never win this economy using bush economic principles.Worse still nema PhD enyu epasi pemiti hamuna kwamunosvika.Mazimbo hoye!!

Tahir Iqbal - 20 May 2017

this statement does not make any sense, bond notes are not useful on foreign soil, if zanu goes ,these woes will come to an end

mukristu - 20 May 2017

this statement does not make any sense, bond notes are not useful on foreign soil, if zanu goes ,these woes will come to an end

mukristu - 20 May 2017

What utter nonesense anybody in S africa coming here would bring Rand with them why would they want to buy Bond notes.Another lie to cover their incompetence

l s morgan - 20 May 2017

People just don't have any confidence anymore with our banking system. Generally all banks themselves are not reliable and there is no trust at all. Their charges, though just recently forcibly adjusted downwards by authorities, remain high. Secondly, the central bank has had a past history of being so unreliable when money would find it's way to the street straight from the mint / printer. So a lot needs to be done to restore confidence. The other thing is that USD200m is not such a significant figure as alluded to by economist John Robertson. If say 8 million Zimbabweans or about half of the population each withdraw USD30 you have USD240m outside banks and this explains why the money isn't there in banks anymore.

Fatso - 20 May 2017

While itz true that the underlying economic environment is not conducive for operating businesses &the public consumption activities but itz well clear that itz the banks who export,ship & externalize large quanties of the disappearing usd &local bond or surogate currency destined for foreign markets for high speculative profits,not choosing instead to meet their local obligation to provide on demand.All the claims that someone has already identified lucrutive bond note market in our zimbabwean diaspora is true of our local banks.Our authorities are unable to control them bec they are more powerful

addmore gudo - 21 May 2017

While itz true that the underlying economic environment is not conducive for operating businesses &the public consumption activities but itz well clear that itz the banks who export,ship & externalize large quanties of the disappearing usd &local bond or surogate currency destined for foreign markets for high speculative profits,not choosing instead to meet their local obligation to provide on demand.All the claims that someone has already identified lucrutive bond note market in our zimbabwean diaspora is true of our local banks.Our authorities are unable to control them bec they are more powerful

addmore gudo - 21 May 2017

Huori wese urimuma commercial banks.The so called authorities hv no capacity to call them to order other than only to sweet talk them &try to convince them to stop the sabotage.These banks are in business for profits their incentive to exercise n responsibility & discipline is far &wide.Corruption beyond control in banks bec they can ship all the money if don't dance to their own tunes

addmore gudo - 21 May 2017

agen bola

hokibos - 21 May 2017

Another route where i see USDollar flight/externalisation is through foreign travels by government officials especially the first citizen. At any given day a third of senior government employees are on foreign land and all of them get cash allowances. Then the Chinese, Russians, Banks and cross border traders but first fix the rot from the head downwards.

Sinyo - 22 May 2017

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nathan - 7 May 2018

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