Cash shortages that have haunted Zimbabweans for over five months now, continue to intensify and recent interventions by the Reserve Bank of Zimbabwe (RBZ) have so far failed to turn the tide.
THE STANDARD COMMENT
Long, snaking queues have become a permanent feature at most financial institutions across the country as depositors struggle to access their savings due to the liquidity crunch.
Depositors are losing productive time as they queue for hours for cash at most financial institutions that are restricting withdrawals to as little as $100 against the RBZ’s recommended limits of $1 000 a day.
Companies, especially those that rely on imported raw materials for their operations, have been paralysed by the cash shortages and the contagion effect on the economy is too ghastly to contemplate.
A few weeks ago RBZ governor John Mangudya announced that the central bank was preparing to introduce bond notes to ease the cash shortages.
However, the nation is still waiting to hear from the central bank when these notes would be introduced, although many depositors are sceptical about whether this is the ideal solution to the crisis, considering the RBZ’s track record.
The demise of the Zimbabwe dollar will remain an albatross around the RBZ’s neck for some time to come and any mention of the re-introduction of the local currency in whatever form would cause alarm and despondency among the traumatised depositors.
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A lot of work is still needed for the RBZ to build trust among depositors and ensure that the bond notes are accepted, but there has to be a solution to the crisis in the short-term.
Mangudya on Friday was still non-committal on the dates the central bank intends to introduce the notes, saying their production was a long process that was bound to take months.
A fortnight ago, the RBZ said it had imported $15 million to ease the cash shortages but clearly that didn’t work as the queues only disappeared for less than a week.
Along with the announcement of the pending introduction of the bonds notes, the RBZ also laid out a cocktail of measures meant to improve liquidity in a market drained by the consumptive nature of Zimbabwe’s economy.
They included tighter controls on cross border transactions and daily cash withdrawal limits.
It is clear that the impact of these measures was minimal and this should have sent clear signals, not only to the monetary authorities, but to the government as well, that the wheels have come off.
The government must stop acting as if it’s business as usual and start addressing these cash shortages in a holistic manner.
Zimbabwe’s economy has been comatose for a long time and this has meant that imports have far outweighed exports.
The only way to address that would be to ensure that the surviving companies ramp up production and those that have closed down are revived.
Bold policy decisions are necessary to create the appropriate environment for exporters to increase production and earn the country more cash.
The RBZ on its own will not be able to end the cash crisis because it has no influence over what happens outside its ambit. RBZ’s capacity to control the liquidity situation is weakened by the fact that it cannot print money.
A lot depends on the government of the day to stabilise the economy, but so far President Robert Mugabe and his lieutenants have remained uninterested bystanders in the RBZ’s firefighting mission.
