NETSAI Makombe yesterday joined hundreds of people who waited patiently to be served at a commercial bank along First Street in the central business district of Harare.
She was wielding a soiled khaki envelope filled with various documents. As Netsai drew closer to the enquiries desk, she pulled out two copies – a burial order and an affidavit.
Her demeanour suddenly became grumpy when she greeted the customer care officer. She sighed heavily, before explaining her ordeal to the bank official who seemed to be listening attentively.
She has lost one of her aunts who apparently has a different surname to hers but one thing for sure is that she needs cash, supposedly for the funeral.
“Tete (my aunt) wanted to be buried in Chivhu,” she murmured to the client services officer. “I want to withdraw $2 million from my account in order to meet part of the funeral expenses,” she explains whilst other customers queuing behind her keenly follow the proceedings.
After explaining, she was handed over a bank form which she took no time to complete.
Upon completion of the requisite form, the bank official told her to make a follow up to the application after two days.
Although she knows that her reason to withdraw money – true or fabricated – seemed compelling, ultimately she knew that her chances of receiving such an amount rested on the bank’s discretion.
This has become the order of the day at most financial institutions in Harare as Zimbabweans seek ways to siphon the fast depreciating local currency from their bank accounts.
For some, this has become aÂ shrewd way of breaching an insufficient daily cash withdrawal limit of $50 000, increased by the Reserve Bank last week.
The central bank concurrently introduced a new $50 000 denomination with a new withdrawal limit amid massive price hikes of basic goods and services.
With a record annual inflation of over 231 million%, Zimbabweans are no longer making real savings in the financial sector, save for some foreign currency dealers eking a living from transactions on the buoyant parallel market foreign currency exchange rate, widely known as the “cash rate” market.
Banks on the other hand have effected relatively high minimum account balances of up to $400 000 for savings accounts in order to promote savings among low-income earners.
The result of this insufficient withdrawal limit and foreign currency dealings has overwhelmed banks and other financial institutions with long queues becoming a common feature at most banking halls.
This thriving unofficial exchange rate market became popular after the suspension of electronic transfers by the Reserve Bank earlier this month. So high are the parallel market exchange rates that US$3 converted at the “cash rate” could secure a return ticket to Bulawayo, which costs between $4 to $5 million.
A wide discrepancy between the official interbank exchange and the parallel market rates has relegated the former to redundancy, trading yesterday at less than $400 to the greenback.
The alternative parallel market cash rate was yesterday trading at $45 000 to the United States dollar, about 110 times the official rate which also operates on cash transactions.
Apart from the biting effects of the comatose economy, the country is also grappling with a high mortality rate because of the HIV and Aids pandemic, which are claiming hundreds of human lives each week. This means that the volume of traffic to banking halls will continue to be high unless widely accepted monetary reforms are introduced.
Failure by the central bank to disclose information on the money in circulation since the beginning of the year has made it virtually impossible to ascertain the financial crisis, while most bankers seldom speak on record on matters relating to the central bank.
A bank executive who spoke to businessdigest yesterday said the cash crunch was now beyond the central bank’s redemption adding that the formation of a new government between President Robert Mugabe and opposition leaders Morgan Tsvangirai and Arthur Mutambara could restore the financial sector.
“Gono is now tinkering with the payment system hoping that a political settlement would resolved these challenges,” said the banker who requested anonymity. “No banker would want to see these long queues at banking halls. The central bank has lost control of money supply growth and this practice of applying
for bulk cash withdrawals is a sign of patronage by the central bank.”
Former University of Zimbabwe economics professor Rob Davies said the emerging trend of withdrawing large sums of money from banks was a reflection of deep-rooted problems in the financial sector.
“Focusing on this chaos caused by monetary authorities is trivial,” Davies said. “What should be asked is why the Reserve Bank has remained quiet on money supply growth figures since March and why central bank accounts have not been audited for four years. Hyperinflation is being caused by the central bank although it is easy to blame business for the price hikes.”
Questions sent to Bankers Association of Zimbabwe president John Mangudya on Monday were not responded to at the time of going to press as he was reportedly
engaged in a series of board meetings.
However, Reserve Bank governor Gideon Gono recently vowed to continue printing money to meet the cash demands.
“I will not stop printing money until sanctions are removed. It is for infrastructural development,” Gono said.
Â By Bernard Mpofu