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Cash shortages: new banking trends emerge


Ngoni Chanakira

THE Central Africa Bui-lding Society (Cabs), the country’s largest building society, says banking trends changed drastically due to the recent cash shortage.
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Zimbabwe has been afflicted by a severe cash crisis, which Finance minister Herbert Murerwa says was attributable to cash hoarding, inflation, parallel market activities, negative real interest rates, high bank charges on cash deposits and speculative behaviour.


The cash shortages disrupted business and economic activities and heavily inconvenienced the general public as well.


The country’s cash situation remained tight for quite some time until government introduced traveller’s cheques, bear-er cheques and $1 000 notes.


“Cabs has seen a change in banking trends due to the cash shortage,” a spokesperson said.


“The number of cheque transactions went up from 11 276 in May to 19 635 in June and up to higher levels for July. This has placed a strain on cheque supplies.”


The Reserve Bank of Zimbabwe (RBZ) on the other hand said with the new measures implemented recently, the situation would change.


Acting RBZ governor Charles Chikaura told businessdigest that as of now it was not feasible, however, to determine in precise terms how much of the existing $500 notes had been returned to the banking system, since money constantly flows in and out.


Government introduced a new $500 note replacing the existing $500 one last month.


It then threatened individuals and organi-sations holding Zimbabwean currency outside the country’s borders that if they did not return the cash it would become “worthless”.


“The number of cash withdrawals was only marginally down from 344 227 in May to 284 952 in June,” Cabs said.


“The number of ATM withdrawals over the same period went down from 258 265 to 43 290 due to unavailability of cash in ATMs while the number of point of sale transactions went up from 237 909 to 362 657.”


The building society said in October last year it received a total of $450 million in cash from its bankers.


In May this year however Cabs received $50 million and in June $280 million.


“Taking the monthly rate of inflation into account these figures indicate the severity of the cash shortages being experienced by Cabs,” the spokesperson said.


“Exacerbating this shortage of cash is the fact that many normal merchants are not depositing cash in banks or building societies because cash can be sold at a premium. While understanding and sy-mpathising with the inconvenience caused to clients, Cabs is unable to control the cash shortage.”


Murerwa said in a bid to solve the cash crisis government outlawed the repatriation of cash outside Zimbabwe through the gazetting of Statutory Instrument 163 of 2003.


To prevent cash hoarding and unlawful trading in cash, both by traders and individuals, government gazetted Statutory Instrument 171 of 2003 meant to ensure accountability of all cash generated and result in the re-channeling of deposits back into the banking sector.

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