Cash burning which was popular during the hyperinflation era of around 2007, is back in Bulawayo, with cash barons taking advantage of the crippling shortages to sell cash to desperate members of the public at premiums of between six and 10 percent, it has been learnt.
The development comes at a time when the cash situation is getting worse with some banks in Bulawayo going for more than two days without disbursing a single cent while some have also cut withdrawal limits to as low as $20 per day. Not to be outdone, mobile money agents are also charging extra amounts to customers intending to cash out.
However, investigations by Sunday News showed that it is “cash burning” which is now gaining traction as those with access to large sums of money are now selling the money. Just like in 2007, the cash barons order people to make either an RTGS or internal transfer into their accounts at a figure higher than what they want.
“For every $100 I was charged $10 on top, so I wanted $500 and I had to transfer $550 into the businessman’s account,” said a Bulawayo resident who has been a victim of cash barons.
“To get the money you go to the bank first and they (cash barons) demand that you get a statement and then you do the RTGS or transfer in their presence, only then you will receive the money. They are also at the moment dealing with people they know and trust,” he said.
Most of the businesspeople identified to be fronting the latest move include those who runs shop and bottle stores.
“They order their goods using plastic money but sell in cash so to them cash becomes a medium to make more money.”
Some of the businesspeople are now even advertising their services using social media such as WhatsApp. Some people also allege that some workers at some banks around the city were working with the cash barons, linking them to desperate individuals who want to make bulk withdrawals. The tellers are also alleged to be grabbing money deposited and then instead of forwarding it for withdrawal, pocket it and make internal transfers to the accounts.
“An internal transfer is fast so on surface there won’t be anything amiss as the money will still be reflecting in the intended receiver’s account,” said a worker with one banking institution.
Reserve Bank of Zimbabwe Governor Dr John Mangudya could not immediately comment as he was said to be out of the country. His deputy Dr Kupukile Mlambo referred questions to the central bank director head of financial intelligence inspectorate, evaluation and security Mr Mirirai Chiremba.
“I think Mr Chiremba is the one who is in charge of such issues. He would be better placed to comment. Please get in touch with him,” said Mr Mlambo.
Mr Chiremba was, however, not reachable for comment.
Zimbabwe has been grappling with cash shortages since the beginning of the year. A survey indicated the Agribank was not giving any cash on Thursday and Friday while ZB Bank was only disbursing the South African rand.
Most of the banks had cut their withdrawal limits to between $20 and $100 and the amounts were only disbursed subject to availability. Sources said at one of the banks, a worker was last week nearly manhandled after telling customers that the bank had run out of money.
Meanwhile, the country’s largest mobile money operator Econet has warned its agents who are now charging extra amounts for cash to desist from doing so and urged customers to report such businesses.
Said Econet in a statement, “Our Agents are not allowed to charge customers any extra amount above the applicable approved Cash-Out tariffs automatically deducted from the phone. We encourage our customers to report such malpractices by advising us of the Agent Code on toll-free 114/111 or alerting their nearest Econet shop.”
This comes amid reports that the agencies were now charging customers extra over and above what is charged officially for cashing out. The Government is also working on introducing bond notes, as one of the measures expected to help ease the liquidity crisis.
Vice-President Emmerson Mnangagwa last week announced that the Government was crafting a law that supports the introduction of bond notes. The bond notes, which will be backed by a $200 million African Import and Export Bank facility are expected to start circulating by the end of this month.
“Acceptance (of bond notes) should be assured due to the following; firstly, the bond notes will be one-is-to-one with at all banks and goods will be priced at the same price whether one is paying in bond notes or US dollar.
“Secondly, banks will be available to swap bond notes for US dollar, rand and travellers cheques where currency is available,” he said. Sunday News