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No cash shortage in Victoria Falls

by Staff reporter
27 May 2016 at 09:34hrs | Views
VICTORIA FALLS - At a time when most major towns in the country are battling cash shortages, Zimbabweans coming into Victoria Falls are obviously surprised by the flawless cash situation in this resort town .

There are no cash shortages and no long queues for customers intending to withdraw their money.

The supermarkets and shops have working point of sale (POS) facilities, and these machines are limitlessly dolling out cash.

People living here said they don't know about any cash withdrawal limits, because no one mentions them.

This sharply contrasts with the mayhem that has rattled Zimbabwe's big cities in the past three months, shaking business and threatening to ground the economy to a halt.

The blazing shortages have sparked intense debate about the whereabouts of millions of United State dollars being imported by commercial banks, and the Reserve Bank of Zimbabwe (RBZ) and precipitated anger by the general population against authorities, who are now desperately trying to deal with the situation by coming up with controls and unorthodox measures.

In Harare and Bulawayo, as well as in Masvingo, Gweru and Mutare, winding queues have resurfaced, bringing back memories of the hyperinflationary era when thousands failed to withdraw their money from banks because of cash shortages.

Between 2007 and 2008, the country was hit by cash shortages, with the central banks failing to print its own cash to meet high demand.

Now, close to a decade on, there is a sense of déjà vu as there are ominous signs of a pending economic crisis, and people have been sleeping in the queues again to get money from banks.

As the crisis deteriorated last month, pensioners failed to access their payouts as banks limited withdrawals to US$100 per individual, only if one was lucky to get the cash.

Even big companies have been limited to daily withdrawals of US$200.

But in Victoria Falls, at the heart of one of Africa's holiday destinations, shop attendants still ask customers if they need cash after transacting on supermarket POS machines.

Visitors used to the turmoil in the big cities sometimes think it is a joke, until they are informed that you can withdraw what you want, there are no cash limits, and there are no conditions such as having to buy goods worth so much to get so much as cash back.

At banks, security guards manning automated teller machines (ATMs) still give customers the choice to enter into almost empty banking halls, or to withdraw cash on the ATMs, which are still dolling out cash!

In Harare, ATMs, once the pride of a robust banking system, have been reduced to monuments, a reminder of the crisis days.

For many visitors from outside Victoria Falls, it is more like a shock to be able to withdraw cash without a hassle while in this resort town.

It is like a dream.

For tourists coming from outside the country, there is no evidence something is wrong with the cash situation in the country. Those with Visa or MasterCard can go to any bank ATM to withdraw cash.

Many of us coming from other cities or towns really keep wondering if this is true.

In the big cities, one becomes some sort of a nuisance for asking already frustrated shop attendants for "cash back".

They are already overwhelmed by high demand.

Since the crisis hit the big cities, consumers have been stampeding to withdraw the little savings they have fearing banks may fall again.

Between 2003 and 2015, at least 30 financial institutions have collapsed, and people have lost savings.

So it's understandable when people get scared.

"We do not know of cash shortages here," says Stephen Sibanda, a taxi driver in Victoria Falls.

"We read about it in the newspapers. We have also just been reading about power cuts in the newspapers. Here we are safe," he says.

But this is Victoria Falls.

It has not only been gifted with accommodating one of the world's greatest wonders, the mighty Victoria Falls itself.

Over the years, it has evolved into a semi autonomous economic system that dictates the shape and direction it wants to chart.

During the hyperinflation era, when the country was on its knees with inflation hitting 500 billion percent in December 2008, residents and tourists were already transacting in multiple currencies.

Waiters invested in properties from tips from global visitors.

The full impact of hyperinflation did not affect this resort town in the same way it crippled the rest of the country.

It is not only that.

Victoria Falls is one of only a few places where people meet policemen, and they give you a smile and greet you without quizzing you in order to extort a bribe.

Government hopes to grow the economy and improve its revenue from service sectors like tourism, and has developed a broad strategy to make life easier for the few tourists still coming into the country.

And for the residents of this resort, anything done to boost tourism is welcome in a country that is battling to overcome a myriad of challenges, including getting cash from banks.

In one of many ad hoc measures recently adopted by authorities to arrest the spiraling crisis, the RBZ said last month it would be introducing bond notes whose value would be at par with the greenback.

Backed by a US$200 million offshore loan, the bond notes will come two years after RBZ governor, John Mangudya, introduced bond coins to ease cash shortages soon after his appointment in 2013.

But the market has been skeptical.

A heated debate exploded in Harare recently, with the country's business sector piling pressure on Mangudya to shelve the bond notes plan, which he says would fund planned export incentives.

Business executives and directors said at a Zimbabwe National Chamber of Commerce breakfast meeting that they feared the possibility that the RBZ could end up printing the bond notes in Zimbabwe, under pressure from government, which has been battling to pay civil servants and meet other critical commitments.

"The bond note is not the way to go," said Ashok Chakravati, a University of Zimbabwe professor.

"We can put a three percent import levy across the board and raise US$2 billion for export incentives. I believe the bond notes are not necessary," he said.

The packed hotel room erupted as executives clapped in agreement.

He was backed by other business leaders.

"We do not trust the people you are working with. These are the people who caused the collapse of this economy. We must not print any money before we agree that this is the right time to do this," said Mukonitronics director, Lovemore Mokono, referring to Mangudya's advisors.

"Countries have to compete for relevance," said Brains Muchemwa, chief executive officer at Oxlink Capital.

"The bond notes must not be imposed," he said.

But the RBZ is bitter.

Speaking at a mining conference in the resort town on Friday, the RBZ director for exchange control, Morris Mpofu, said the cash shortages have been caused by factors that include manipulation by foreign nationals taking advantage of laxity in cash withdrawals at ATMs in Zimbabwe to siphon money out of the country.

The country has also been a victim of illegal and legal exportation of funds into safe havens.

The central bank has opened investigations into about 280 locals named in Panama Papers.

Prominent names from the list released early this month from the leaked documents of a Panama law firm, Mossack Fonseca, include Zimplats chief executive officer Alex Mhembere, property tycoon Ken Sharpe and former Aico chief executive Happymore Mapara. There is currently no evidence of wrongdoing on the part of those implicated.

The RBZ said there were legal reasons for opening offshore accounts.

It will be approaching the issue with an open mind, as not everyone named could be guilty of crime. However, the bank has questioned the morality of transferring large amounts of cash to tax havens like the Cayman Islands and the British Virgin Islands.

"We have 280 Zimbabweans on the Panama Papers which the Reserve Bank is investigating," said Mpofu.

"We are surfing through that list. Some took funds to the British Virgin Islands and the Cayman Islands," he said, noting that the introduction of the multicurrency system in 2009, which is credited with briefly stabilising the economy, had seen international criminal syndicates taking advantage of the country's lax policing of its financial systems.

In one case, three foreign nationals camped at a five star hotel in Harare, withdrawing US$3 000 per day for 30 days, Mpofu said.

They then slipped out of the country after bribing officials at the border post, he claimed.

Consequently, the RBZ has tightened the screws on withdrawals, with individuals now permitted to withdraw a maximum of US$1 000 per day, or R20 000.

But most banks are giving a maximum of US$200 and US$500 per day due to cash shortages.

Mpofu defended the limits, saying "we have been too generous, very few Zimbabweans earn US$30 000 per month".

"The challenge that we faced when we liberalised the economy, is that we opened up and became a safe haven for international criminals. Zimbabweans also became ill-disciplined as well. Zimbabwe has become a fishing pond of hard currency."

"We have been using our foreign exchange irresponsibly over the past five years and that has also contributed to the situation we are in," said Mpofu.

Source - fingaz

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