Zimbabwe’s cash crunch grows worse
UNDER normal circumstances, businesses in Zimbabwe would be smiling to the bank – what with packed supermarkets, emerging long queues at fuelling stations and manufacturing capacity that is ticking up.
But such is contradicted by the evidence of a country with experts saying the behaviour of consumers is remiss.
Economists and business say the strain on banks to meet depositors demand for cash will persist for the next two to three months despite the introduction of local bond notes in the next few days.
Most of Zimbabwe’s stock comes from South Africa, Botswana and Zambia but import restrictions have curbed these while local manufacturers – despite seeing a jump in capacity utilisation – have remained constrained by delays in foreign payments and lack of ac- cess to key capital.
Rand Merchant Bank Africa analyst Neville Mandimika said Zimbabwe was in for a bumpy ride in the coming two months.
“Given the banking sector exposure to illiquid treasury bills, the upcoming festive season and scepticism over bond notes, banks will likely remain under pressure to meet demand for cash in the next two to three months,” Mandimika said.
‘No trinkets’
Finance Minister Patrick Chinamasa this week said that the days of buying “things that are not useful for Zimbabwe’s productivity”, were over despite signs of a potential strife ahead of the festive season with fuel companies saying they are not accessing adequate foreign currency to import sufficient volumes of fuel.
“We will no longer allow foreign currency to buy trinkets which have no use at all for the development of this country. Foreign currency that we earn as Zimbabwe is going to be prioritised with respect to its usage,” Chinamasa said.
We have been saying to the government we want a currency that is tradeable and acceptable.
Despite resistance from producers and the public, the government has stuck to its guns with the introduction of bond notes.
Economists said the government was covering up for money that has been taken over from exporters’ accounts.
The government has made a big effort trying to justify the bond notes and has put up bill- boards and run adverts in all media in Zimbabwe to drum up acceptance of the legal tender.
Bank managers said they had no option but to support the government’s option despite some preferring the rand.
“Barclays has always offered rand withdrawals as an alternative but there is scepticism over the South African currency’s volatility but for exporters it could work well. The bond notes are coming and our teams are readying up,” one bank official said on Thursday.
Fuel shortages have started to emerge, especially in Harare in the past few weeks. Some fuel retailers have been declining card payments, preferring cash while others are offering discounts for cash purchases.
“It has become a survival issue in retail and we have been saying to the government we want a currency that is tradeable and acceptable as a medium of exchange,” said Retailers Confederation of Zim- babwe head Denford Mutashu.
Other executives in the retail sector told Business Report that supply procurement had been constrained in recent weeks owing to problems with payments to foreign suppliers.
“We are between a rock and a hard place; on the one hand we have to meet customer expectations, fullfill obligations to suppliers and also be in line with government frameworks but at the moment its all not tallying and we are bearing the problems. Stock supplies will likely be in short supply,” they said.