Of cash limits and bank requirements

 
As of now, history is not important as it has more potential to devour our core existence as a nation.
Events on the ground point to a dangerous situation especially if the political protagonists take further their negotiations as the people are finding it difficult to make ends meet.
Economists will say if inflation is feeding on itself then there will be more need for the government and stakeholders to resort to desperate measures to find a solution if the economy is to remain functional.
In fact, the desperate measure seems to be political instead of being aimed at enhancing production and incentive to work.
If the July annual inflation rate was above 231 million percent, I wonder how authorities are interpreting this information which is causing alarm and despondency in all economic sectors albeit being three months behind reality.
On a daily basis, the inflation rate translates to more than 500 000 percent on average, which is very unfortunate given that our national leaders continue to adopt the wait-and-see attitude.
The situation impacts negatively on our nationhood’s reputation such that if it takes little time to recover from this situation, then heroes would be created over very small efforts, which the current status quo is refusing to honour and consider hearing.
While we appreciate the central bank’s explanation that Germans have refused to supply it with paper on which to print money, now that we have a home-grown solution, is it still necessary to maintain these cash withdrawal limits especially at $50 000.
From a layman’s point of view, with the above rate of inflation, its really ideal without being asked or told for the central bank to review withdrawal limits twice a week if they are to remain meaningful to citizens, otherwise the monetary authority will be accused of denying citizens their hard earned cash.
Honestly, how are the bank queues going to end when individuals are made to withdraw what is not even enough for them to buy lunch, or meet transport requirements, let alone buy something to take home after work?
With a lot of things being sold in foreign currency, it follows therefore that if the central bank is really interested in people’s survival, cash has to be made available urgently to enable families to have decent meals and avoid situations of bad publicity when images of hunger stalked people are flighted around the world by international news agencies despite the fact that some of them are millionaires if not billionaires.
It’s not that we are trying to oppose everything that the central bank does but at times this should happen.
When the RTGS and internal bank transfers where banned I believe it was in the belief that people would stop “burning” money (kupisa mari) without considering the cause of this syndrome.
It is also my belief that in the process we forgot that people still have to settle their transactions, thereby putting necessary pressure on cash and cheques payment modes.
Now with restrictions on cheque transactions as it is believed to be the remaining avenue being used for “burning” money, should we expect better economic fortunes?
In some circles it is being argued that kupisa mari is a poor policy reflection.
While subscribing to the above, the truth is that due to high inflation being fuelled by under production, the need to purchase in foreign currency and the central bank’s massive quasi fiscal operations, to mention a few, any economic activity may technically be illegal, implying that Zimbabwe has become a scholarly “do as you like” country with no one in control, thus putting much strain on the rule of law.
“Burning” money is not that technical but something that comes upon a realisation of a better exchange rate when compared to the one obtaining officially.
Given that the cash exchange is very low when compared to the RTGS, inter-bank and now the cheques rate, it follows that we will soon have no cheques or these would be left for the government related transactions.
Why have these three been criticised so much despite being minimally used when compared to cash?
I don’t believe the central bank would ban the use of cash since it has been the chief culprit in these illegal foreign currency transactions
Those in the banking sector argue that if it were not for the foreign currency related minimum capital requirements, the inter-bank rate would be indeed a true reflection of our exchange rate as evidenced by the RTGS, inter-bank or cheque rates, where individuals and companies are paying the highest prices for them to find this scarce resource (forex).
This then implies that foreign currency will remain in abundance on the parallel market while the formal sector remains starved due to penalties it is imposing financially on legal citizens.
But the question arises, is this what we want? If not, then what are the real measures being put in place to ensure that those with the foreign currency are rewarded fairly to make them continue availing it to the formal system?
As a nation we look forward to our leadership to consider national sentiments and views as the country belongs to all of us.

l Lovemore Kadenge is the president of the Zimbabwe Economics Society (ZES). He can be contacted on cell (0912732873) or e-mail: lovemore.kadenge@gmail.com
Disclaimer: The views expressed in this article are those of the author and not necessarily of ZES.