Bank queues return as cash crunch bites

via Bank queues return as cash crunch bites NewZimbabwe 18/11/2013

A BITING liquidity crunch in the country’s banking sector that has seen depositors queuing for days to withdraw their savings is threatening to put a damper on merry-making this festive season.

Economists fear the liquidity crunch could ultimately lead to the collapse of some banks.

Cash shortages and long, winding queues in banks, last seen during the 2008 meltdown when the local currency, the Zimbabwe dollar, was still in use, are now commonplace in most urban areas.

In Harare’s Central Avenue, one of the locally-owned banks has been battling severe cash shortages for the past month, which bank officials blame on depositors no longer making regular deposits.

“We are not sure how long the situation will continue for; it is really a wait-and-see approach,” said a banking official in Harare who asked not to be named.

The same bank’s Bulawayo branch has imposed withdrawal limits of $200 in an attempt to make the little cash available go around.

Public servants last week were paid their annual November bonuses by the government and the bulk of the nearly 230,000 public servants are likely to access their windfall at the beginning of next month – a situation that certainly will increase the demand for cash ahead of the Christmas holidays.

“The liquidity crunch also has to do with pre-and post-election pressure that has been bearing on the banking sector,” the banking official said.

“In the run-up to elections, investors were not sure of the outcome of the elections and anticipated violence and disputes, while in the post-election phase, some people in the business community did not get the results that they wanted and either externalised funds or held on to their savings.”

The economy has emerged as President Robert Mugabe’s single biggest enemy. Western financial institutions have refused to open up new lines of credit until Zimbabwe clears off a $12bn debt owed to the International Monetary Fund.

Tony Hawkins, a University of Zimbabwe Graduate School of Business lecturer, said for the economy to grow at 7.3% annually, in line with targets set by the Zim Asset blueprint, an investment of 33% of gross domestic product would be required annually.

“Going forward, growth will be limited by a number of binding constraints that will make it extremely difficult to reach the Zim Asset target. If growth depends heavily on investment, and investment depends significantly on savings, then consumption growth must slow substantially,” Prof Hawkins said.

The appointment of Indigenisation and Economic Empowerment Minister Francis Nhema in September has slowed concerns over the hasty implementation of the 51% indigenisation programme.

Nhema’s predecessor, Saviour Kasukuwere, ruffled feathers during his tenure when he indicated his intention to force foreign-owned banks to comply with indigenisation rules.

Nhema said targeting the banking sector was not his priority. “Why should I target foreign banks? It is depositors’ money that is in there, and not ours. We have no business in indigenising the banks.”

Economist Brains Muchemwa said the government was incapable of intervening directly in the liquidity crunch and needed to emphasise reforms that would create an environment that would enable the private sector to obtain credit.

“Areas in need of attention include capitalising the Reserve Bank of Zimbabwe, as well as restoring its lender-of-last-resort functionality. Measures aimed at deepening the financial sector will need to be pursued in order to build confidence and eliminate inherent vulnerabilities within the banking sector,” said Muchemwa.

“All these measures, if implemented, will create a stronger Reserve Bank of Zimbabwe.”

 

COMMENTS

WORDPRESS: 21
  • comment-avatar

    Zim stil remains a blessed nation,

  • comment-avatar
    Boss MyAss 7 years ago

    IT STINKS

  • comment-avatar
    Washumba 7 years ago

    What is that true

  • comment-avatar
    simon 7 years ago

    if we had honest decent elections and commercial farming alongside the mining and normal tourism zim would be booming. but no…. greed and brainlessness prevail from zim leaders and henchmen. Things will never change unless these areas are sorted.

  • comment-avatar
    Tony Pajamas 7 years ago

    Meantime “the money” is leaving Zim via the back door as fast as they can shovel it out the country to preserve it……

  • comment-avatar
    Ha'penny 7 years ago

    The jurassic ruler copied the former PM by appointing a lawyer to head finance. It’s not the profession that made Biti a good FM but leadership, ability, policies and neurons. Pat does not have none of the above. Just check the Herald business headline for 19 Nov. Hope the editor was on leave.

  • comment-avatar
    Ha'penny 7 years ago

    The jurassic ruler copied the former PM by appointing a lawyer to head finance. It’s not the profession that made Biti a good FM but leadership, ability, policies and neurons. Pat has none of the above. Just check the Herald business headline for 19 Nov. Hope the editor was on leave.

  • comment-avatar
    easily fooled 7 years ago

    Washumba, yes it is trur, some bank employees have gone without salaries, check this out

  • comment-avatar

    It’s inevitable imminent. Only printing zimdollars can give zanupf urgent breathing space. Fruitless denying 2008 is back with a vengeance

  • comment-avatar
    Odessa 7 years ago

    Bringing the Zim dollar is no longer an option but a necessity

  • comment-avatar
    OSCAR 7 years ago

    They say a number of banks will close, suggest all and sundry get their money out as quickly as possible whilst there is still some left. Dont deposit you will lose. When the Zim$ comes back it will soon be worthless again.

    Everybody must think about food supplies mealie meal will soon be running out, buy now and store for the future. There is huge trouble coming.

  • comment-avatar
    Mr Mixed Race 7 years ago

    It looks like our debt is increasing weekly because it was standing at $10 billions a week ago, its now $12 billions today.Our Chinese friends must give us money now not tomorrow.Some people like Shebah still tell me that our diamonds money is here,why not use it before our debt increases further.What is the logic in not using it now?

  • comment-avatar
    chimusoro 7 years ago

    They took our savings once before-probably do it again!

  • comment-avatar
    hilton 7 years ago

    its bcoz of incapability of minister of finance as well as of mining.hw many mining sectors do w have,agriculture and whr is the suplus? Our G.D.P iz vry high but only 1 prblm z the suplus z not reaching whr it must be bocz of our manegerial style full of corruption.

  • comment-avatar

    God save Zimbabwe & all it’s People.Amen

  • comment-avatar

    We just have to face reality. The scums called Zanu won’t take the nation anywhere!

  • comment-avatar
    Chirau 7 years ago

    So here we go again…… hardly surprising. Zim $ then price control, then shops raided…. then nothing on the shelves then starvation. Who voted for these idiots?? Oh! And then what? Do they think China is going to help? – no of course not – it will be the West again supplying food and medical for the impoverished while ZANUPF wallow in their wealth, and complain about not enough aid from the West.

  • comment-avatar
    Chirau 7 years ago

    I must say I didn’t expect things to go down the toilet this quickly! This is how it all started last time. Does anybody – especially the electorate – not remember? This is not history repeating itself… this happened s few years ago! Until MDC righted the ship!

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    midlands 7 years ago

    only in zimbabwe where u can work hard for your money for the whole month but no cash at the bank.maybe the zanu-pf idiots should ask their east freinds for the chinise currency.they have failed the voters again!!!!