Cash crisis: Govt targets companies

Source: Cash crisis: Govt targets companies – DailyNews Live

Blessings Mashaya      8 April 2017

HARARE – Under-pressure Finance minister Patrick Chinamasa has promised
severe punishment for companies and other traders who are not banking
money – accusing them of fuelling the country’s cash shortages which have
worsened in recent days.

This comes as banks have reduced further their daily withdrawal limits, in
addition to suspending dispensing money through Automated Teller Machines
(ATMs).

Speaking in Parliament on Thursday, Chinamasa said some organisations were
wantonly disregarding the Bank Use Promotion (and Suppression of

Money Laundering) Act – which compels corporates to bank their surplus
cash on a daily basis when banks are open for business.

“In Zimbabwe, the opposite is true and as a result, we have noted with
great concern the deliberate disregard to the laws of the land by these
traders.

“Such unscrupulous traders should not continue to enjoy the freedom of
being in the reserved sectors without compliance. The net is closing in on
those players who continue to disrespect our laws.

“To date, three traders have been hauled before the courts for not banking
their sales proceeds, in line with the laws of the country. They have all
pleaded guilty to the offence and they now await their sentences after the
Easter holidays,” Chinamasa told gathered lawmakers.

“Non-banking of cash by traders is also a major cause of cash shortages
and queues for cash at banks. This indiscipline is counterproductive and
cannot continue to be tolerated.

“Money is like blood, it needs to circulate for the economy to survive.
Money should be circulating in order to deal with queues at the banks.

“Banks find themselves in a difficult position where they are compelled to
ration cash withdrawals in order to meet their customers’ demand.

“Banks have, therefore, continued to explore pragmatic measures to meet
their customers’ demand for cash,” he added.

The biting cash shortages have forced banks to slash further withdrawal
limits, with most of them now disbursing a maximum of $30 dollars a day,
down from their usual $100 – while those that had capped the maximum
withdrawal limit at $500 a week have pulled this back to $200.

The cash shortages are also continuing to worsen despite the recent
opening of the tobacco marketing season.

The Reserve Bank of Zimbabwe (RBZ) increased the bond notes withdrawal
limit from a maximum of $150 a week to $100 per day, and $300 per week
towards the end of last year.

It has so far injected $102 million worth of the surrogate currency into
the system.

In the meantime, there are growing fears that the country’s economy may
soon hit the disastrous lows of 2008 – as bond notes continue to lose
their value against the United States dollar, with the coveted greenback
now almost completely unavailable on the open market.

At the same time, economists have told the Daily News that poverty levels
in the country are skyrocketing, with average incomes now at their lowest
levels in more than 60 years – and with more than 76 percent of the
country’s families now having to make do with pitiful incomes that are
well below the poverty datum line of more than $500.

In his annual birthday interview with the ZBC in February, President
Robert Mugabe unwittingly confirmed Zimbabwe’s worsening rot when he
revealed that he too was keeping his money at home, fearing bank failures.

“They (ordinary Zimbabweans) carry those earnings into their pillows and
briefcases back home and hold funds back home and become reluctant to
release them. Then the banks will not have any resource and will continue
to talk of illiquid banks in the system.

“That is what has happened. Dzimba idzi dzizere nemari (Many homes are
full of cash). Tikati kumapurisa nemasoja (If we instruct the police and
soldiers to) go house by house and dig for the funds that are being hidden
there . . . You will be guilty and I will be guilty.

“I don’t know who will not be guilty here . . . Dzimwe nguva ukaona tumari
twako wotya kuti aah ndikanoisa uko kuti ndizonoitora mangwana hapana (If
you have savings you will be afraid of depositing them in the bank because
tomorrow you may not get that money).

“So you tend to keep it. It’s not your fault . . . It’s the fault of a
system that has not yielded enough cash. Mind you, the (American) dollar
is not our currency,” Mugabe said.

Mugabe and his warring ruling Zanu PF, in power since Zimbabwe’s
independence from Britain in 1980, stand accused of turning the once
thriving local economy, which at one time was regarded as the bread basket
of Africa, into a much-derided basket case.