Zimbabwe
is currently facing a cash shortage situation which has seen people sleeping in
queues at banks only to get as little fifty dollars for them to repeat the same
ordeal, but others spend days without getting the much needed cash they want.
Measures have been put in place to improve the cash crisis, with the
introduction of the bond notes and the wide use of plastic but they have helped
so little in shortening the queues and the demand for hard cash, in fact these
measures have been more like fuel to the already burning fire. The cash crisis
has resurrected the great Ralph Waldo Emerson who once said money often costs
too much, and this he has awoken to say as it is happening in Zimbabwe. The
current state has made hard cash an expensive commodity to hold on to as people
are now taking advantage by charging an extra value if one wants their money
from institutions or individuals who will be having the liquid money.
Most
places now if one wants to avoid the sleeping in queues brigade they have a
price to pay for easy access to money as they have to pay a minimum of 10% per
transaction or of amount they want. Surprising enough they can also be able to
withdraw more than the stipulated withdrawal limit per day, this also goes
beyond institutions as they are individuals who have the hard cash in both
dollar and bond notes with the US dollar costing a bit more than the bond note
which on average cost 10% per transaction. Indeed this shows that money is now
costly in the country, this is being further made so by other organisations
that deny plastic money with excuses such as our network is down or simply our
point of sale device is not working, which then forces people to fork out their
hard cash which will then be sold at premium to the next desperate buyer. Companies
that mostly import their products are facing challenges with their letters of
credit as they are being rejected now due to the late payment of their orders
or non-payment of their orders at all which will then force them to demand hard
cash from the local customers for them to remain viable and operational. This
is one important matter that has to be addressed by the finance authorities in
the country as it will affect the progress that plastic money had already taken
in the country and also to avoid a slide in value in the bond notes as the
currency that imports goods will diminish in drastic fashion.
The
$200 million dollar bond facility that was put in place to help push up money
supply and boost export viability in Zimbabwe has been utilized in a cautious
manner to avoid the effects of hyperinflation that the country went through
years back. The reason behind the cautious utilization being that there is no
export growth but the other reason being that if fully utilized it might drive
the remaining hard currency out of the market and be left with only bond notes
which will be devalued on a daily basis a repeat of the previous Zim dollar and
bearer cheques. The introduction of a wider use of plastic money has also
helped ease the situation though challenges have risen which must be addressed
especially in system upgrades and improvement on connectivity issues. Plastic
money and mobile money have seen an increase in use due to the cash shortage
but at the same time remain costly in transacting using them thereby not being
financially inclusive as they are supposed to be. These are the instruments
that are supposed to be the in thing especially in a highly informally country
as Zimbabwe with low levels of trust in the financial institutions due to their
high costs and the recurrence of bank closures now and then. Transaction fees
have always been high in the country with the central bank in 2016 having to
step in and putting a directive to reduce costs within banks as they were
making a killing which in turn discouraged more customers at a time when the
sector needs to build trust and a wider market for their services.
Current
high costs in transacting and the new profiteering regime that has taken shape
will always make money too costly, which is bad for business and the economy as
this will lead to high levels of inflation and more speculative activities with
regards to the bond notes against other hard currencies. We all know what
speculative can do to a currency within a day, a memory we wouldn’t want to
evoke at this time. The only hope that is in increasing broad money supply now
lies in agriculture which has already been boosted by tobacco and now we await
maize which was done under command agriculture but with more needed as that
alone cannot suffice for long periods as they only hold short term reprieves
due to the seasonality of agriculture.
Money
often costs too much, Ralph Waldo Emmerson.
