The Reserve Bank of Zimbabwe (RBZ) has disbursed ZiG46 million in notes and coins to the banks, but only 30% of the cash has been released to the market, Finance, Economic Development and Investment Promotion deputy minister David Mnangagwa has said.
Responding to questions about the scarcity of ZiG at the inaugural Capital Markets Conference which ended yesterday in Nyanga, Mnangagwa said that most of the cash circulates in the informal sector, but the banks, which have the notes, only transact with the formal sector. Said Mnangagwa (via NewsDay):
I did raise concern with the governor about the issue around fear of money not circulating and, indeed, he showed us his dashboard of the amount of notes that have gone to the banks.
But, we went further and asked how much have the banks released to the markets and this is where the joke is.
They have only released 30% of the monies they have been given by the RBZ and what then happens after that is now outside of the RBZ’s control.
So, you find that most of the fiat money circulates in the informal sector, but the notes are with the banks who only transact with the formal sector. Maybe it’s going to be gradual.
Last month, Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu said that the central bank released enough ZiG cash for use by the public in conducting low-value transactions and for change.
Mushayavanhu urged corporates and individuals to approach their banks and withdraw coins for transactional convenience.
Mnangagwa was unsure whether the country still had cashback facilities but urged retailers to go to the banks to get ZiG notes and coins. He said:
I don’t know if our economy drivers have bank accounts that they need to go and withdraw coins. I think we have to assist each other to make sure that there’s circulation of these notes.
So, it is an issue that is, I think, dividing the whole market and we need to come up with innovative ways. I don’t know if the capital markets can help.
I’m not sure if they actually are concerned about the notes and the coins. Probably not so much, but this is a countrywide issue.
The shortage of ZiG notes and coins in circulation is inconveniencing traders and transport operators, among others.
There are concerns that the shortage of notes and coins will work against the government’s efforts to promote the use of local currency and make de-dollarisation difficult.
