New strategies needed to mitigate cash crisis

Source: New strategies needed to mitigate cash crisis – DailyNews Live

4 August 2017

HARARE – The Reserve Bank of Zimbabwe’s decision to introduce an
additional $300 million bond notes will not help ease the current cash
crisis.

There was a lot of excitement and apprehension last year when the central
bank introduced the $200 million Afreximbank-backed bond notes, with the
majority of people hoping that the export incentive would help reduce cash
shortages.

However, less than a year down the line, the situation is far from ideal.
In fact, things have gone from bad to worse as depositors are now only
getting at most $20 a day from their banks while corporates have resorted
to the black market to get foreign currency.

This then begs the question, how will the next tranche of bond notes help
with the current cash crisis?

What Zimbabwe requires at the moment are new strategies to help stem the
liquidity crunch that has resulted in companies failing to make foreign
payments while local depositors are spending lots of valuable time queuing
to withdraw their cash.

The Confederation of Zimbabwe Industries was spot-on this week when it
noted that the country lacks a clear-cut strategy to deal with the
country’s foreign currency shortages and foreign payment delays, presently
pegged at over $1 billion.

Due to the foreign currency shortages, local manufacturers are also
failing to secure key raw materials on time from foreign suppliers as the
country’s banks have low nostro account balances.

Zimbabwe’s largest industrial body must be applauded for speaking up and
highlighting some of the challenges affecting the country.

For quite a long time now, most influential stakeholders in the economy
such as businesses, lawyers and the academia have been very conspicuous by
their silence on macro-economic matters affecting the majority of people
in the country.

It is an undeniable fact that Zimbabwe has very great potential, enormous
potential, it is a country that is in a region that is growing. It has a
central location within that region and historically it has had a very
well-educated population.

But the country clearly lacks good policies that can unlock value and
improve the livelihoods of its citizens.

Since 1980, the policies within the country have not always been conducive
for economic growth and that is something for both the government and
private sector to sit down and see what can be done.

The government has to put the right policies in place and the private
sector has to make use of those policies to create economic growth.

One of the reasons why things are not going on well in Zimbabwe is the
lack of consistent conducive policies due to the ruling party’s – Zanu PF
– predatory politics.