Finance minister Patrick Chinamasa has claimed that depositors are fuelling the country’s biting cash crisis by keeping money outside the formal banking system.
But depositors have said they were resorting to “pillow banking” because they could not access their cash from banks when they needed it.
Zimbabwe has been experiencing cash shortages in the past few weeks — reminiscent of the 2008 economic and political crisis — with depositors queuing for days at banks to get their hard-earned money.
“The liquidity crisis is a problem that we have to look squarely in the face and address,” Chinamasa said bizarrely, claiming that government was putting in place various measures, including a national financial strategy to ease the challenge.
“We have to understand that we don’t print the United States dollar. We are a unique country — one of three countries in the world — that pays wages and buys small goods like mazhanje in United States dollars and that comes with its own challenges,” he said.
Zimbabwe abandoned its own currency in 2009 and now uses mainly the US dollar and the South African rand, although other currencies are also legal tender.
However, the recent depreciation of regional currencies against the greenback has seen the country losing more money to increased imports, as it is now cheaper to import than buying local products.
Chinamasa added that the “temporary cash shortages” were also being accelerated by Zimbabweans refusal to embrace plastic money.
“Although we don’t print the US dollar we are a cash economy. Last year, tobacco farmers were all paid $600 million in cash which they went and put under the pillow. You cannot move money out of the banking system and expect banks to remain with money,” he said.
In an effort to encourage people to use the banking system and promote financial inclusion, Zimbabwe recently ordered tobacco farmers, most of them communal farmers who had taken up growing the cash crop and ditching others such as maize and wheat, to open bank accounts to facilitate payments for deliveries
The new system has, however, been blighted by glitches as farmers failing to access their money on time from banks forcing them to spend days at tobacco auction floors.
Zimbabwe usually gets a boost from the tobacco marketing season, which brings temporary respite to informal traders and manufacturers selling their goods to tobacco farmers who would have pocketed money from selling their crop.
However, the situation is different this year as the economy is slowly grinding to a halt due to cash shortages as both government and private sector employees are struggling to access money from banks.
Chinamasa said government will soon make it mandatory for maize and cotton farmers to receive payments through banks as part of strategies to ease the worsening liquidity crunch. Daily News
