Business community should bank their proceeds

The continued liquidity crunch being experienced in country could be a result of illicit financial deals by some people in the business community who are unwillingly failing to deposit their proceeds in their bank accounts.

Section 11 of the Bank Use Promotion Act requires business people to deposit their profit in their bank accounts. The Act stipulates that: 'Every trader, and parastatal shall, unless it has good cause for not doing so, deposit in an account with a financial institution, no later than the close of normal business hours on the day following that on which the cash is received or on the next banking day, cash that is surplus to the requirement of the trader.'

Recent reports from the Reserve Bank of Zimbabwe (RBZ) have it that cash deposits have declined by an average of 40 percent during the month of May 2016. Such a wide margin decrease in cash deposits is a big threat that can cause further cash shortages and economy decline due to limited flow of the money.

Most foreign business people like the Chinese, Indians and Nigerians operating in Zimbabwe have been fingered for externalizing cash to their home countries. This has actually worsened the cash crisis in the country. President Robert Mugabe was spot on when he advised the Chinese business people to deposit their proceeds in our local banks. It would be wiser if all investors both local and external deposit their profits in their bank accounts. Certainly, this will allow smooth circulation of cash in the economy. As it stands, most business people are either smuggling their profits to their respective countries or withholding it at their homes or business premises.

Investors should be more concerned with doing business that support and promote growth of the economy there are operating in rather than derailing the efforts of developing that nation. All those found guilty of illicit financial flows should be severely penalized as this is contributing to the destabilization of the economy left, right and center.

On the other hand, banks should try to moderate their arbitrary charges. High banking charges create financial burdens especially for low income earners. People should not hesitate to deposit their hard earned cash in their bank accounts. High banking charges scare aware depositors thereby disturbing the smooth circulation of cash in the economy. Bank charges should accommodate even those in the informal sector who may want to safely keep their profits in their bank accounts.

If both informal and formal workers put an effort to deposit their funds in their accounts, the risk of withdrawal limits will also be minimized. It wouldn't be fair if one deposits a certain amount of money but will be limited to withdraw it because of limited cash in those banks. It is therefore everyone's responsibility to deposit their proceeds in order to permit constant circulation of money in the market.

However, it is heartening that most retail and wholesale shops have introduced point of sale (POS) purchases at their outlets. Fuel dealers should also emulate the use of POS purchase and introduce them at their filling stations. This is a safe way of transacting as people would not be forced to travel around with large amounts of money reserving it for fuel.  Big retail and wholesale shops that do not have POS machines should be encouraged to do as this a better way of trying to manage the current liquidity crunch.  

Unfortunately, the economic challenges that the country is encountering are being twisted into political issues by the opposition parties. The government has been busy layering constructive measures to control the issue of cash crisis, but most opposition parties have been shooting down the ideas.  Instead of proffering substantive solutions that support government policies and programmes, opposition MDC party led by Morgan Tsvangirai was also busy making noise in the streets inciting innocent Zimbabweans to resist governments' efforts.

-------
chido chikuni <chidochikuni@gmail.com