News / National
Zimbabwe import millions of dollars to ease cash crunch
17 Apr 2016 at 09:58hrs | Views
Zimbabwe will soon get US$200 million from Africa Export-Import Bank to ease cash shortages that beset some towns and cities over the weeks.
The money will be released from Afreximbank's nostro and export facility following discussions with the Reserve Bank of Zimbabwe.
A nostro account is a bank depository held in a foreign country and denominated in the currency of that land. Such accounts essentially facilitate import and export payments, especially in the case of inter-state transactions.
The US$200 million is a loan and will be offset in terms of debt clearance instruments already agreed with Afreximbank.
Cumulatively, the lender is assisting with US$1,369 billion: US$200 million as an interbank facility, US$200 million for grain imports, US$150 million for small-scale gold mining and US$819 million bridging finance.
Further, experts say tobacco earnings will restore normalcy to formal banking.
Tobacco farmers who have delivered their crop to auction floors since March have been paid US$27,3 million while export earnings have reached US$226,9 million since January.
And unlike in previous years when the farmers were paid in cash, from 2016 the money is being transferred into bank accounts. This essentially means tobacco alone has pumped more than US$200 million into banks.
For two weeks now, parts of Zimbabwe have been experiencing cash shortages which the banking sector has attributed mainly to rapid cash withdrawals, dependence on imports, unbanked businesses and illicit financial flows.
Some banks have shut down automated teller machines and are limiting withdrawals to US$200.
RBZ Governor Dr John Mangudya, who is in Washington, DC for World Bank and IMF Spring Meetings, told The Sunday Mail that money was being imported, but did not state the figures.
"Yes, indeed (we are putting in place measures to deal with the cash situation). We have advised the market that we are importing more cash to deal with the cyclical cash challenges in the country," he said.
An official who preferred anonymity added, "Government has almost secured an amount in the range of US$200 million from Afreximbank. This is a short-term measure to deal with the high demand for cash.
"To help alleviate the problem, the RBZ has enlisted the support of Afreximbank to put in place a nostro (US dollars held in foreign banks) and export support facility. That facility will bridge the gap between the high demand for cash between October and February when only gold and platinum were major earners before tobacco joined in March with the opening of the tobacco auction floors.
"In total, Afreximbank is helping with US$1,369 billion in the following way: US$200 million for the interbank facility, US$200 million for grain imports, US$150 million for small-scale gold mining and US$819 million for bridging finance to help clear arrears."
Bankers' Association of Zimbabwe president Mr Sam Malaba encouraged the market to embrace plastic money and retail cash-back facilities.
"We have stuck to what the (RBZ) Governor said; it is time we, as a nation, start to use plastic money when making transactions in this time. We are urging everyone to take part in lessening our collective problem (cash shortage).
"I am well aware that the governor has enlisted the support of Afreximbank to put in place a nostro (account) which will go a long way in dealing with the current cash situation."
Mr Malaba went on: "With the tobacco selling and marketing season in full swing, we expect the cash to start circulating and exchanging hands, hence, the cash shortage will be a temporary thing.
"However, our negative trade balance is also contributing to the current problem as we continue to import more than we are exporting, consequently that area needs to be addressed. I don't have much to say about the issue, but for all the questions you have, I can refer you to the governor."
The money will be released from Afreximbank's nostro and export facility following discussions with the Reserve Bank of Zimbabwe.
A nostro account is a bank depository held in a foreign country and denominated in the currency of that land. Such accounts essentially facilitate import and export payments, especially in the case of inter-state transactions.
The US$200 million is a loan and will be offset in terms of debt clearance instruments already agreed with Afreximbank.
Cumulatively, the lender is assisting with US$1,369 billion: US$200 million as an interbank facility, US$200 million for grain imports, US$150 million for small-scale gold mining and US$819 million bridging finance.
Further, experts say tobacco earnings will restore normalcy to formal banking.
Tobacco farmers who have delivered their crop to auction floors since March have been paid US$27,3 million while export earnings have reached US$226,9 million since January.
And unlike in previous years when the farmers were paid in cash, from 2016 the money is being transferred into bank accounts. This essentially means tobacco alone has pumped more than US$200 million into banks.
For two weeks now, parts of Zimbabwe have been experiencing cash shortages which the banking sector has attributed mainly to rapid cash withdrawals, dependence on imports, unbanked businesses and illicit financial flows.
Some banks have shut down automated teller machines and are limiting withdrawals to US$200.
RBZ Governor Dr John Mangudya, who is in Washington, DC for World Bank and IMF Spring Meetings, told The Sunday Mail that money was being imported, but did not state the figures.
"Yes, indeed (we are putting in place measures to deal with the cash situation). We have advised the market that we are importing more cash to deal with the cyclical cash challenges in the country," he said.
An official who preferred anonymity added, "Government has almost secured an amount in the range of US$200 million from Afreximbank. This is a short-term measure to deal with the high demand for cash.
"To help alleviate the problem, the RBZ has enlisted the support of Afreximbank to put in place a nostro (US dollars held in foreign banks) and export support facility. That facility will bridge the gap between the high demand for cash between October and February when only gold and platinum were major earners before tobacco joined in March with the opening of the tobacco auction floors.
"In total, Afreximbank is helping with US$1,369 billion in the following way: US$200 million for the interbank facility, US$200 million for grain imports, US$150 million for small-scale gold mining and US$819 million for bridging finance to help clear arrears."
Bankers' Association of Zimbabwe president Mr Sam Malaba encouraged the market to embrace plastic money and retail cash-back facilities.
"We have stuck to what the (RBZ) Governor said; it is time we, as a nation, start to use plastic money when making transactions in this time. We are urging everyone to take part in lessening our collective problem (cash shortage).
"I am well aware that the governor has enlisted the support of Afreximbank to put in place a nostro (account) which will go a long way in dealing with the current cash situation."
Mr Malaba went on: "With the tobacco selling and marketing season in full swing, we expect the cash to start circulating and exchanging hands, hence, the cash shortage will be a temporary thing.
"However, our negative trade balance is also contributing to the current problem as we continue to import more than we are exporting, consequently that area needs to be addressed. I don't have much to say about the issue, but for all the questions you have, I can refer you to the governor."
Source - sundaymail
