Ail­ing banks start de­mand­ing IDs be­fore cit­i­zens can draw cash from ATMs and sug­gest curb­ing weekly with­drawal lim­its

CityPress - - Business - MEM­ORY MATARANYIKA busi­ness@city­

The bat­tle for scarce cash is in­ten­si­fy­ing in Zim­babwe, with some banks re­quir­ing de­pos­i­tors with­draw­ing money from cash ma­chines to present their ID first, and fi­nance in­sti­tu­tions are now re­quired to im­port only smaller de­nom­i­na­tions of the US dol­lar, which is widely used in the coun­try.

Fi­nance Min­is­ter Pa­trick Chi­na­masa has also said that govern­ment would en­gage the World Bank, the African De­vel­op­ment Bank and the African Ex­port-Im­port Bank (Afrex­im­bank) on lo­cal cur­rency in­tro­duc­tion.

The lo­cal bond notes cur­rency will be equal in value to the US dol­lar and will be backed by a $200 mil­lion (R3 bil­lion) fa­cil­ity availed by Afrex­im­bank.

The govern­ment’s bid to en­gage the in­ter­na­tional and re­gional fi­nance in­sti­tu­tions is aimed at en­sur­ing that the use of lo­cal bond notes would not back­fire on the strug­gling econ­omy.

Panic with­drawals had hit the Zim­bab­wean banks, among them units of Ned­bank, Stan­dard Bank, Bar­clays, Ecobank and Stan­dard Char­tered, said bank ex­ec­u­tives.

They are also now re­quired to im­port smaller de­nom­i­na­tions of the US dol­lar as a mea­sure of deal­ing with cases of cash be­ing smug­gled out of Zim­babwe.

A bank­ing in­dus­try ex­ec­u­tive said: “We are strug­gling to meet daily de­mand for cash. There are fewer banks that are im­port­ing the US dol­lar into the coun­try and this is com­ing at a pre­mium, leav­ing the banks stretched. We com­mend the ef­forts to en­cour­age us­age of other cur­ren­cies, such as the rand.”

Chi­na­masa said Pres­i­dent Robert Mu­gabe’s govern­ment was “con­sult­ing Afrex­im­bank, the In­ter­na­tional Mone­tary Fund (IMF), the African De­vel­op­ment Bank and the World Bank to ex­plore mech­a­nisms that could be put in place to en­sure there was no abuse in the is­suance of bond notes, and that they were is­sued rel­a­tive to the quan­tum of ex­ports” gen­er­ated in the econ­omy.

Zim­babwe’s ex­port sec­tor is strug­gling, with the coun­try procur­ing stock for most of its raw ma­te­ri­als and fin­ished prod­ucts mostly from South Africa and Zam­bia.

Govern­ment sources told City Press this week that Trea­sury was speak­ing with in­dus­try ex­ec­u­tives about hav­ing them in­crease their ca­pac­ity for some com­modi­ties, such as cook­ing oil, or risk govern­ment restor­ing im­port per­mits.

Econ­o­mists say the net im­porter sta­tus of the coun­try has wors­ened cash short­ages in the coun­try, with “all the for­eign cur­rency gen­er­ated in­side the coun­try taken out­side the coun­try” in buy­ing fin­ished prod­ucts and raw ma­te­ri­als.

Busi­ness lead­ers and econ­o­mists have spo­ken out against the in­tro­duc­tion of the bond notes, while bankers say with­drawal lim­its should be curbed at $500 a week be­cause the av­er­age salary in Zim­babwe is less than $400 a month. How­ever, the bat­tle for cash has wors­ened in the past few weeks, with bank queues now a com­mon fea­ture, es­pe­cially at the lo­cally owned banks in Zim­babwe.

South African ex­porters to Zim­babwe will also now have their ac­counts cred­ited in rands for ex­port re­ceipts af­ter govern­ment said ex­porters would be paid in the cur­rency of the ex­port des­ti­na­tion. Banks have had to limit cash with­drawals and ask de­pos­i­tors to pro­duce iden­tity cards when tak­ing money from ATMs, and most fi­nance in­sti­tu­tions are stop­ping real-time gross set­tle­ment pay­ments and with­drawals from ma­chines op­er­ated by ri­vals.

A real-time gross set­tle­ment is a pay­ment plat­form that al­lows de­pos­i­tors at one bank to trans­fer money into ac­counts of de­pos­i­tors at other banks. For ex­am­ple, a trans­fer from Ned­bank to Stan­dard Bank. Trans­fers done in this way usu­ally take 24 hours.

“Kindly note that with im­me­di­ate ef­fect, ID ver­i­fi­ca­tion will be car­ried out at all our ATMs coun­try­wide to en­sure that only card own­ers trans­act,” said Stan­dard Char­tered Zim­babwe in a mes­sage to de­pos­i­tors this month.

The IMF has said that it would as­sess the ef­fect of the in­tro­duc­tion of the ban­knotes by Zim­babwe, while the World Bank said that the coun­try’s econ­omy would grow by 1.4% this year. The World Bank flagged political un­cer­tain­ties and softer com­mod­ity prices for the ex­pected slow­down in eco­nomic growth in Zim­babwe and other sub­Sa­ha­ran African coun­tries.

The Re­serve Bank of Zim­babwe said this week that it was in­tro­duc­ing new forex reg­u­la­tions aimed at hav­ing ex­port­ing com­pa­nies in the coun­try “grad­u­ally ad­here to the prin­ci­ple of 75% lo­cal con­tent [re­ten­tion] by the re­source-based sec­tors of the econ­omy and so that the econ­omy could ben­e­fit from the liq­uid­ity de­rived from the ex­port of its nat­u­ral re­sources”.

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