THE Zimbabwe National Chamber of Commerce believes Government needs to pump US$1,2 billion in physical bank notes into the market to support the informal sector.
A shortage of bank notes has fuelled mobile and electronic payment platforms.
Reserve Bank of Zimbabwe statistics show electronic transactions rose to US$62 billion in 2016 from US$57 billion a year earlier, while point-of-sale transactions leapt 260 percent to US$2,9 billion in that period. Notably, 2016 was the only year since the adoption of the multi-currency system in 2009 when POS transactions exceeded ATM values.
ZNCC president Mr Davison Norupiri told the Parliamentary Portfolio Committee on Finance and Economic Development in a review of the 2017 Monetary Policy Review last Monday that the informal economy needed cash to function.
He said the cash situation had become so dire that for every US$1 a depositor had in the bank, only USc5 could be honoured on demand. The group said US$1,2 billion — which represents a fifth of the country’s total bank deposits at US$6 billion — would suffice.
“Considering high unemployment rate as well as high levels of informalisation in the economy, the demand for cash remains high notwithstanding the policy incentives towards plastic money.
“The chamber expects that the cash position should be about 20 percent of the total public claims on the banking sector, thus, the economy should be sitting on around US$1,2 billion in cash and nostro in order to manage cash problems,” said Mr Norupiri.
The central bank has been importing US$60 million per month since the beginning of March against monthly demand of US$320 million. It has been difficult to roll out plastic money in rural areas as the bulk of the population there is unbanked.
Mr Norupiri said; “The membership of the chamber continues to lose loads of productive man-hours as employees spend disproportionate amounts of time queuing at the banks. There is, therefore, need to resolve the cash challenge in order to restore confidence.”
The continued push for plastic money use, including the reduction in electronic payment charges, has improved transactions. Broadening the currencies used for the real time gross settlement system (RTGS) has also had a positive impact on trading.
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