Is Finance Minister’s reforms triggering new cash crisis?.
A revealing editorial in today’s Herald says SI 142/19, which hastily scrapped the multi-currency system & prematurely introduced a non-existent Zimbabwe dollar as the sole legal tender in the country, has triggered a new CASH CRISIS!.
The recent currency reforms announced by Government banning the use of multiple currencies have since proved to be a good move that has halted ills like unwarranted price increases.
But the new currency policy should be consolidated through other measures that will plug the holes and ensure that the majority of people fully benefit.
Since the introduction of the local currency as the sole means of trading, we have witnessed those who have been unfairly benefiting from the use of multiple currency regime resorting to new ways in a bid to perpetuate their unscrupulous ways.
A worrying trend that has emerged since Statutory Instrument 142 of 2019, which effected the ban on foreign currency, has been the sprouting of corner shops selling bond notes and coins to members of the public at a premium.
People are being forced to buy bond notes and coins mainly because some shops are in the habit of rejecting transactions that are being done through EcoCash and debit cards. There are still other transactions that demand one to pay in cash like the use of public transport, especially kombis.
We urge Government to look into ways to ensure that at least people get some cash from banks so that they are able to transact without resorting to buying the money from corner shops.
What seems to have happened is that the black market dealers have simply shifted to setting up the shops that sell cash, as demand for foreign currency declined because of the new currency measures.
We are now witnessing a situation where there are no longer queues at the banks because they are not offering the cash, with the queues shifting to the corner shops where people are ripped off by the currency traders.
These traders are taking advantage of a desperate situation faced by the people in terms of accessing cash. There is need for close monitoring of those in business who are rejecting transactions using other forms like EcoCash and swipe, insisting on cash basis only.
Authorities should also investigate the sources of the bond notes and coins that are being sold on the parallel market when banks are not dispensing enough cash.
What the monetary authorities need to also ensure is that the cash in circulation is enough to cover transactions by the public, otherwise people will continue to be taken advantage of by the currency dealers.
This demand for cash payments only has seen some traders charging premiums for EcoCash and swipe transactions, as compared to payments in cash.
The selling of the local currency is a reflection of the skewed view of money by Zimbabweans, a move motivated mainly by greedy. It seems there are some people in the country who have made their business to try and make money through unorthodox means.
This trend, if allowed to continue, threatens to erode the gains of the currency reforms and perpetuate a behaviour similar to the foreign currency black market.
We have noticed the desire by Government to print at least $400 million to fill the gap created by the removal of the foreign currency and also to replace worn-out bond notes.
This is a good move which should be implemented quickly to cover the gap that is driving the public to buy the cash at a premium.
The availability of the cash will also kill the unjustified and skewed pricing of goods, which has forced people to pay more in some shops if they do not use cash.
In the same vein, we urge Zimbabweans to change their view of money, and start using it for its intended purposes.
Money was never meant to be sold, but is a means of acquiring goods and services, and it is important that Zimbabweans revert to the original use of money.
Otherwise Government’s move to ban transactions in multiple currencies is bearing the much needed results of rescuing people from greedy dealers who were fuelling the foreign exchange parallel market.
Some big shops and traders had also joined the rush to peg their prices against the exchange rate obtaining on the parallel market.
We notice that the buying power of ordinary workers had been eroded drastically, as they were being made to part with their hard-earned salaries in search of the United States dollar, since many dealers and traders were rejecting the local currency.
To avoid reverting to this position, we urge the authorities to quickly address the money supply side, but in a way that will not fuel inflation.
A modest injection of more bond notes and coins on the market will kill off the “cash-for-sale” market.
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