As the liquidity crunch bites deeper into the country’s economy, banks have stopped making international payments in United States dollars, indicating that they can only make the payments in currencies of the recipient countries.
Last week, CABS became the second bank, after MBCA, to advise its clients of the new development.
In a notice sent to its clients, CABS managing director, Simon Hammond, said all cross border payments destined for countries whose currencies are freely tradable on the international foreign exchange markets, would be settled in the currency of the destination/receiving country, effective June 1.
“As such, we will require that all invoices presented as supporting documents for cross border payments be in the relevant currency of the country from which the invoice has been issued. Currencies in this category that we are currently able to clear include USD, ZAR, GBP, EUR and BWP,” the notice said.
“We further advise that payments to Southern African Development Community (SADC) countries, other than South Africa, can also be paid in ZAR through the SADC Regional Electronic Settlements System, which is a more efficient payment system. In the circumstances, we encourage you to consider this option for payments destined for the SADC region, by being invoiced in ZAR. The countries that are currently on this regional payment platform are South Africa, Namibia, Zimbabwe, Zambia, Malawi, Lesotho, Swaziland, Mauritius and Tanzania.”
Hammond encouraged the bank’s clients making local payment transactions, to make use of Point-of-Sale machines as well as the mobile and Internet banking facilities.
On March 31, MBCA issued a similar notice to its clients, which notice came into effect this month.
In his Monetary Policy Statement for the first quarter of this year delivered on February 4, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, highlighted an unsustainable situation of money flowing out of the country, thereby dwindling the economy’s liquidity position, and said urgent attention is required to remedy the problem.
According to Mangudya, a total of US$1,8 billion was externalised in 2015, of which US$1,2 billion was siphoned by corporates and US$684 million by individuals, thus exporting liquidity.
He called for prudential measures to plug illicit financial out-flows.
The severe cash shortage that the country is facing has seen some retail shops insisting that shoppers who want to use their cash-back facility should buy goods worth a certain percentage of the amount of cash they would need to access, a survey by the Financial Gazette revealed.
In most of the cases the percentage is as high as 30 percent.
“I was told that if I wanted a US$50 cash-back, I had to buy items worth US$15, so I had to leave because at this rate, I would have ended up spending most of the money on buying things that I don’t need,” said Collet Ndiraire, a Harare man who was running around to access his salary to pay his rentals, school fees for his children as well as meeting other day-to-day needs of his family.
The cash shortages are also affecting international money transfer agents.
A Zimbabwean based in Australian told the Financial Gazette about how his family was stranded in Masvingo since last week after travelling from Mwenezi in order to collect the money he sent them, as the local agent of the international money transfer agency had no cash to make pay-outs.
Cash barons have emerged on the local market where they are selling cash at rates of up to 10 percent.