via Zimbabwe cash crunch:Hundreds queue outside banks for hours November 27, 2013 by Bernard Mpofu/Moses Matenga NewsDay
Zimbabwe’s financial institutions have reportedly been hit by severe liquidity constraints forcing some of the banks to limit withdrawals as government pays out annual bonuses for the civil service against the backdrop of an underperforming economy.
Clients, mostly civil servants, queue outside the Central Avenue branch of Metbank yesterday. This was the situation at most banks in the capital as cash shortages hit the banking sector.
NewsDay yesterday gathered that most commercial banks have put daily limits on withdrawals triggered by uncertainty. This follows the loss of $1 billion from the formal banking sector just before and after the July 31 elections.
Information at hand shows that the daily limits now range from $200 to $1 000, with predominantly foreign-owned banks having a higher threshold compared to indigenous banks. As a result the depositors will have to incur more bank charges.
A senior official working for a locally-owned commercial bank told this newspaper that depositors started queuing at the bank’s automated teller machines (ATMs)as early as 5am yesterday in a bid to withdraw their bonuses, but failed to do so up till mid-morning. He, however, said the reason was to do with technical hitches at the cash dispensers.
“Most of them came as early as 5am as you know it’s month end and civil servants are still getting their bonuses. Most of them could not withdraw their money because of some technical challenges. The machines were down, but the problem has since been addressed and they are now getting their money,” he said. “We are not putting caps on their withdrawals because the money is there. We don’t want you to write a negative story on this one because it will have a boomerang effect.”
Police officers made up the bulk of account holders that formed long queues at Metropolitan Bank (Metbank), CABS, Kingdom and Trust banks, among others, trying to withdraw their salaries and bonuses yesterday.
Soldiers were the first to receive their bonuses two weeks ago.
When the news crew visited one government-owned financial institution at mid-day yesterday, two queues of withdrawals were seen meandering for several metres outside the bank with security details struggling to maintain order and calm.
Bankers’ Association of Zimbabwe (BAZ) chief executive officer Sij Biyam, however, said the association was not aware of the new withdrawal caps placed by the banks.
“As far as I know, the liquidity challenges that started in 2009 are still persisting the same way they were then. The best way to look at this issue would be to approach the individual banks because as far as I know, the association hasn’t received such reports. Some banks may have their internal issues, so it would be best to approach them,” Biyam said.
Panic withdrawals during the election period, according to banking sector sources, had resulted in some banks making frantic efforts to negotiate fresh lines of credit.
A source at one of the commercial banks with foreign ownership said the bank was in talks with foreign investors to secure $80 million to plug a hole created after the bank lost $30 million in the run-up to the elections.
This, the sources said, could ease the cash constraints affecting the bank despite concerns that confidence in the fragile banking sector was at its lowest.
The developments come at a time when the Reserve Bank of Zimbabwe has delayed the announcement of the monetary policy statement which was initially scheduled for August.
Reports suggest that central bank governor Gideon Gono may be on his way out after serving two terms since 2003. The banking sector is reportedly pinning its hopes on the new Reserve Bank chief to steer the sector.
Players say systemic risks confronting the financial services sector stemmed from the undercapitalisation of the central bank which rendered the bank unable to play its role as lender of last resort.
The banking sector, according to a pre-budget submission made by BAZ, was now characterised by serious liquidity constraints and generalised banking sector vulnerabilities which included, among other issues, slowdown in broad money supply growth since the beginning of 2012, with lowest growth rates being recorded in 2013. Official figures showed that broad money grew by 12,23% in May, declining from 14,85% growth in April.
“The composition of deposits has generally remained unchanged over the past 12 months — indeed since multicurrency. Deposits still remain highly short-term with demand deposits constituting an average of 83% of total deposits,” BAZ said.
“The economy is currently haemorrhaging via the current account, as the balance of payments situation continues to deteriorate, reflecting low and declining domestic industry capacity utilisation levels.”
The bankers proposed a raft of measures which include re-engagement with multilateral finance institutions and the need to formulate an effective debt arrears clearance programme.
Faced with the new challenges, the new administration has crafted a new economic blueprint, Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), which is anchored on attracting more foreign capital as well as growing domestic savings. This, according to ZimAsset, is key to restoring confidence in the financial services sector.
Zimbabwe’s economy has fallen to its lowest ebb since dollarisation with key economic sectors, save for tobacco farming, in a free-fall.
The manufacturing sector, which contributed 20% of the economy at its peak, is confronted by de-industrialisation.
Experts say government has not helped matters by delaying the 2014 budget statement which gives signal to investors on the new path the new administration wants to chart.
COMMENTS
Ndizvo zvinodiwa neZANU PF. An African oppressing an African, A Black man oppressing a black man whilst blaming the white man. Mugabe will always blamed the west.
Fast forward 3 or 6 months…total chaos collapse. Nothing can improve our nation until zanupf is in thedustbin and it’s criminals doing hard Labour. Then it’s gonna be all go
Why are they trying to get salaries in cash ?, why not use ATM cards when shopping ? Don’t they have debit card machines in grocery shops ? Why insist on doing this backward thing of cashing the entire salary ? If there is a shortage of these debit card machines, it is due to lack of demand. People simply have not utilised this option of using debit card machines. I remember the old days when debit cards were introduced in Zim around 1998,thse payday queues still persisted. I regret to conclude that my people in Zim are backward
The question is who made them backwards? Why do people prefer to withdraw their money from banks? Before the crash of the Zim dollar I used to do a lot of saving and I thought I was financially stable. Over a few days my savings were worthless. Some one I know sold his house for 800,000 dollars because he had seen a better house for 900,000. By the time he received the money the house he wanted to buy was 3 million dollars and climbing. Suddenly he was homeless. Rents went up to 100,000 dollars and all of a sudden he had 9 months rent in his bank account.He then had to leave the city because he could not afford to rent.How many similar stories can be told? Who knows if you leave your money in the banks what will unfold when you get up in the morning.The people have no faith or trust in Gono or the Banking sector especially with the threat of indeginisation hanging over the established banks heads.
I suppose they can use debit card to pay for taxi fares and bus fares. Nekutenga muboora pabus rank.
is this news tru, if tru then it shld nt b publishd as t wl result n ripple effect that wl c banks cashing n on multiple wthdrawal fee charges and two on general feeling of panic by citizens that wl result n further insecurity and collapse, a situatiion coveted by th enemies of our dear REPUBLIC
Whether published or not, there is no money in circulation, enough to cater for all the needs. Its is the duty of the media to tell the truth, remember why zbc broke down, pple perceived it to be a team of liers n could not trust its news. Lack of confidence. The papers will be broke for lack of buyers like the herald
Kanyembwele brought a sound idea of atm and plastic money. He must be a lecturer or a young professional with ego. First zimswicth doesn’t work, second, chinese and idian shops want cash. Thirdly, commuter omnnibus will need accept cards, whether debit, credit, visa or what. Lastly, many people ll be spending their holidays in the rural areas, there are no atms, plastic mooney in unrecognised. So the idea of plastic money is bookish
Whether reported or not, lack of cash, inflation and shortages are felt by the stomach and not by the eye (hear news) or eye (seeing it on paper). All and sundry feel the crunch including the robbers.
Coalition government that leadss to free and fair elections is the answer
The bottom line is that most banks are in trouble, they do not have the liquid cash to cover deposits, the RBZ is broke and they cannot borrow from that source to cover withdrawls. Anybody with any sense will withdraw their deposited funds whilst there is still time! If you dont you will lose.
Iwe Tafadzwa, wakambotenga madomasi nemaonions neATM card. Unobvunza kuti CASH VANHU VANOIDA YEI. kwana…
Tafadzwa inini ndoda kubhadhara roora so i need cash.
cry the beloved country
Biyam u nt even serious and u think tts a comment to sae individual banks shud be approached, for what? i think u knw the best person to approach, our own president if the truth be told. thy hev failed the country and the best wae thy shud do nw z to remove that 51% animal.ts time up and shud leave the game.
guys lets be realistic the blind can not clean the blind, we need people with real life solutions. “matakadya kare haanyaradze vana.”
Job welldone nirkuv may the heat continue so that pple wil go fo an uprise and se th truth
Even in the first world countries you will need hard cash in hand Tafadzwa. You can rig elections but not the economy. Let us just watch ladies and gentlemen tione kwazvichasvika.
The story is positive in tt it tells us what is happening in the banking sector. It’s negative in tt it promotes panic withdrawals. Whilst the reporter is on line of duty, ‘telling as it is’, the risk is soon there won’t b money in banks. My little economics tells me tt it is not good for any economy. The use of debit cards leads to less withdrawals hence more cash in banks. Of course we need petty cash to buy small items. Unless where necessary, there is no need to withdraw large amnts. Now, after reading this story, we are afraid tt our savings will b drowned in these banks hence we withdraw all our deposits. We were making huge strides in having a culture of saving back. I have friends who are making monthly deposits of 150.00 neposvo. Now this is the third yr. Can u believe kunakidza kwazvo tt u have something in the bank. Now when we read such articles, we panic. I am happy tt our bank posvo has given us the assurance tt all is well. Savings ndizvo Zimbabweans. It’s a good culture. Nobody will come forward and say let’s build yo banking sector. Iwe neni tines basa rekuvaka nyika. To the reporter, kp doing yo job but b convincing plz. It seems ma boss ekuma banks ari kuti there is no such a thing. If it’s true, u coz unnecessary panic.
Kana bofu chairo rinotoona kwazvirikuenda izvi, asi vanhu veZanu ndovasingaoni. Rega vatore macompany ese tigoona nzara zvedu!! People are going to wake up once and for all, and then maybe ingazvarwa nyika yacho yakafirwa nevamwe vedu , tigosunungurwa zvachose!
Talking about plastic money in Zim economy is stupidity of highest proportions, no book will support this, they have failed us.
No business sector is operating at par with economic trends in Zimbabwe. So dig an elbo deep hole into the ground, put and cover your money with soil, mark the pit with a bould, return at anytime, dig it up you are assured of finding it. Take it to any Zimbabwean bank, return it the next time, well sensationilisation of issues is not my business.
How cruel after assisting someone to illegimately rig the elections which were going to give you freedom now you are struggling to get your salary. However it suits you civil servants because you are too nice. You been abused for to long by ZANU PF. Sadlly though soem of you the salary is so litle that it would be financed by the cash some ZANU PF guys carries in their cars. Imagine some carry in their cars over USD$1000000, how many soldiers can be paid, almost the whole brigade. The guns you are carrying guys are not toys.
Whilst it is obvious people do need some cash to do some transactions, I still do not see why most people will withdraw entire salaries in cash, and not use debit cards for some transactions. It seems an ingrained culture phenomenon.
Tafadzwa asi urikunyora uri kuEngland kani?
It doesn’t matter kuti ari kupi Tafadzwa wacho. The point is, and I agree with him, that a lot of transactions could be done electronically and therefore take some pressure off those meagre cash reserves available. It’s obvious kuti haungatengi muriwo kumusika necard, but people don’t buy everyhthing kuMusika, and not everybody lives kumusha.
The problem is obviously much bigger than all of the above anyway, and there is only one word to describe the cause of all these problems and many more, it’s : ZANU (PF)!!!
If the Government has no money how can they afford to pay bonuses?
Better to stuff money under the mattress than in a bank. At least you know for sure that you lose your money if the mattress gets turned by a thief. Expect to pay $10 a month in future just for the privilege of keeping money in a Zimbabwean bank.