Tobacco farmers failing to get cash

Tobacco farmers are struggling to get their money at auction floors, as the country's severe cash crunch continues to worsen.

This is despite the government's recent directive to banks to pay tobacco farmers $1 000 for their initial sales.

Frustrated farmers who spoke to the Daily News yesterday confirmed that they had battled over the past three weeks to access money from both banking halls and at automated teller machines (ATMs).

This had seen many of them sleeping out in the open on empty tummies, as they waited to access their money.

This also comes after tobacco farmers recently disrupted auctions, after the Tobacco Industry and Marketing Board (TIMB) sanctioned a Zimra directive to withhold 10 percent tax on their gross tobacco sales.

The government was later forced to reverse the decision following a meeting between Agriculture minister Joseph Made and his Finance counterpart Patrick Chinamasa, after the farmers threatened to withhold their crop in protest.

This comes as Zimbabwe's economy continues to die - as manifested by rising poverty levels, worsening job losses and severe cash shortages - with the government showing signs of panic, amid fresh warnings by experts that the country is headed for an economic disaster akin to the meltdown of 2008.

It also comes as the Reserve Bank of Zimbabwe (RBZ) has set the maximum limit for cash back facilities by retailers and wholesalers at $20, as authorities desperately try to mitigate the country's worsening cash crisis which is forcing long-suffering Zimbabweans to spend hours at banks queuing for their money.

"Any cash-back facility made available by retailers and wholesalers shall not exceed an amount of $20.

"The Reserve Bank shall collaborate with wholesalers, retailers and their associations to ensure the adequate provision of Point of Sale (POS) machines in order to enhance the use of plastic money for transactions," recent notices delighted by the under-pressure central bank said.

But a government source who spoke to the Daily News at the weekend said the country's bigwigs were "panicking" over the ever-deteriorating state of the economy.

"I won't lie to you, we are all panicking. While it's clear that the RBZ is doing its best, unfortunately our problems are deeper than the central bank's mandate, which is why they appear to be treating the symptoms and not the causes of the problems," the senior official said.

An executive with a retail chain, who spoke on condition of anonymity, also criticised what he called "panicky, knee-jerk" policy pronouncements by the government that he felt would not mitigate the dire situation obtaining on the ground.

"We have now reached a situation where we do not know whether to laugh or cry. I mean, what kind of policies are these where we are compelled to bank our money but can't get this cash back when we need it?

"Our biggest fear is that this is more and more looking like the nightmare of 2008 . . . and while I'm not one of (People's Democractic Party leader Tendai) Biti's admirers, I think he was correct when he described our economy as a Ponzi scheme (a fraudulent investment operation)," he said.

On its part, Morgan Tsvangirai's opposition Movement for Democratic Change (MDC) said the Central Bank should "simply own up and declare that the prevailing cash crisis is beyond its control".

"The wheels have totally come off. The bond notes experiment has been a spectacular flop. The chickens are coming home to roost. What Zimbabwe needs and needs very urgently, is a lasting solution to its long standing political and socio-economic crisis," spokesperson Obert Gutu said.

"These stop-gap measures like limiting cash backs to be paid by retailers simply won't do. We need to cure the cause of the disease, not just rushing to suppress the symptoms," he said.

PDP spokesperson Jacob Mafume alleged that senior government officials were "the biggest hoarders of cash" in the country and not ordinary Zimbabweans who were targeted by the new monetary measures.

He also said the RBZ was "criminalising what is ordinary economic activity in other countries".

Economist Kipson Gundani said the new cash back limits showed that Zimbabwe had entered "an era of cash rationing" — adding that he did not expect the measures to end the country's severe cash shortages.

Mfundo Mlilo, a governance and public policy expert, also said the cash back limits reflected the fact that the country's cash crisis was worsening.

"The money supply situation is worsening and this will negatively affect aggregate national demand . . . It's an ungodly act at Easter," he said.