THE Reserve Bank of Zimbabwe (RBZ) has shored up cash imports from the current US$10 million to US$15 million per week to between US$15 million to US$20 million per week in order to meet rising demand for physical cash.
Payments to tobacco and cotton farmers, including Government salary obligations to civil servants and pensioners, are feeding into the unsustainably high demand for cash.
Though electronic transactions have improved, cash queues have not abated.
Experts say the market needs more than US$80 million per week in order to easily transact.
RBZ Governor Dr John Mangudya told The Sunday Mail Business last week that increased imports will help to meet rising demand. “We are happy to note that we have increased the importation of US dollars from the previous rate of US$10 million to US$15 million; to US$15 million to US$20 million.
“…This is on the backdrop of the ever-increasing demand of US dollars from tobacco farmers, as well as the cotton farmers, whose marketing season has just started. The other demand for cash comes from schools opening, civil servants salaries and maize crop farmers under the Command Agriculture Scheme who are paid on delivery at the Grain Marketing Board. “We hope this increase will do a lot in helping the cash situation in the country,”said Dr Mangudya.
RBZ says it will continue importing smaller denominations such as US$5 notes and US$10 notes.
The US$20 notes will be imported intermittently to avoid externalisation and risks associated with high-value denominations. Market watchers say despite efforts by the central bank to promote plastic money, a lot of interventions are still needed to lessen the burden for the transacting public.
There are suggestions that the RBZ has to ensure that banking platforms are interoperable (or link) to the systems of mobile phone companies — Econet, Telecel and NetOne — to allow free movement of money within the payment ecosystem.
There are also calls for charges to be further reduced so that operators rely on volumes rather than margins. Currently, funds cannot move freely among the mobile operators, which all fall under the Postal Telecommunication Regulatory Authority of Zimbabwe (Potraz).
The central bank is currently pushing for a shift from cash transactions to plastic money. Deliberately using plastic money is thought to ease the demand for physical US dollars.
The strictures and bureaucracy involved in importing cash – often associated with anti-money laundering rules and regulations – makes the whole process extremely difficult. Also, international banking regulations limit the amount of cash that can be imported per day. But Dr Mangudya says cash deposits at banks have been encouraging of late.
“Cash deposits at banks and nostro holdings have increased by 50 percent to US$450 million.
“The US dollar cash deposits and the foreign exchange held in nostro accounts are over and above the $140 million of bond notes, $23 million bond coins and an estimated US$400 to US$600 million in circulation in the economy.
“In order to maintain this positive development and for more convenience to the transacting public, the Bank is putting in place measures to make the use of plastic (including international credit cards) and electronic money cheaper and more attractive than using cash and to ensure that bank account holders are bona fide law abiding and taxpaying citizens,” he said.
It is believed that the current interventions will help promote the enhanced use of plastic and electronic money, which currently accounts for 70 percent of retail transactions.
Notably, the supplementary allocations of foreign exchange by the bank are over and above the US$1,2 billion of foreign exchange made available by banks to the various sectors of the economy during the period January to April 2017.
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