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Zimbabwe Struggling to Contain Cash Crisis

FILE: Customers waiting for their turn to withdraw money from the Bulawayo branch of the Metropolitan Bank

Zimbabwe’s central bank governor says the financial services sector imported $216 million between January and April this year in a bid to ease cash shortages but this has failed to improve the situation.

John Mangudya told parliamentarians today, who was called by the parliament’s finance committee to explain the current cash shortages in the country, that the central bank imported $145 million between January and April this year while six banks imported $118 million during the same period.

Mangudya said only six banks down from 19 last year had imported money with Stanbic Bank accounting for the bulk of the money at $45 million.

He said the central bank is taking a number of measures to improve cash problems in the country including the use of plastic money to reduce the pressure on cash supplies.

Apart from importing cash, Mangudya, said there was need to boost production and craft policies that attract foreign direct investment. He added that the opening of the tobacco marketing season would improve the cash situation.

He said the high cash demand was largely caused by the payment of civil servants’ bonuses, the importation of maize owing to the El Nino weather phenomenon and withdrawal of huge amounts for cash for speculative purposes due to lack of confidence in the banking sector.

Mangudya noted that Zimbabweans are no longer keeping money in banks due to high bank
charges and failure to pay meaningful interests on deposits.

Current cash shortages have seen banks limiting cash withdrawals to as low as $50 as banks try to ration cash among their customers.

Asked why the Reserve Bank of Zimbabwe cannot revert to the use of the Zimbabwe dollar which it can easily control, Mangudya said that was out of question.

Zimbabwe’s import bill stands at $7 billion against a $3 billion export bill and Mangudya said this could be rectified by boosting production and exports. The country’s major foreign currency earners are tobacco, gold, platinum, diamond and diaspora remittances.