adminThe majority of bank accounts are held to facilitate the payment of salaries. As a result, most people visit the bank once a month on payday and prefer to keep their money, no matter how large the amount, at home.
You can hardly blame the people for their mistrust of the banking sector. During the cash crisis of 2008 up to the introduction of multiple currencies, most people struggled to get their hard earned money from banks. Banks actually became second homes as people would spend hours in queues to withdraw cash.
With the demonetisation of the Zimbabwe dollar, quintillions of dollars were locked in bank accounts and many are still bitter about this money, which for some, worthless as the money might have been, represented their life savings.
Because of these experiences, Zimbabweans were disillusioned and thought the best way to keep their money was away from the banks. It is estimated that more than $2 billion is outside the formal banking system.
Reports that some banks are now failing to issue cash will not do anything to engender confidence in the banking system. If anything, the mistrust will increase and those few who had faith in banks might be forced to withdraw their money.
Many people thought that the cash crisis went away with the Zimbabwean dollar. But according to a story in yesterday’s Chronicle, some workers have not yet accessed their January salaries while transactions processed under the Real Time Gross Settlement System have not been honoured, severely affecting business operations.
“The situation brings back disturbing memories of what happened in 2009. I have contractual obligations to pay my suppliers and employees at fixed dates. It has been three weeks since I used the RTGS system to pay but to date, the money has not come through.
“My suppliers are adding interest on daily basis on my purchases while some have threatened to cancel my credit facility with them. Morale is also very low among my employees because they are yet to get their January salaries,” said a businessman from Bulawayo who spoke on condition of anonymity.
Action needs to be taken now to ensure that whatever is happening at the affected banks does not spread to their entire banking sector through a knock-on effect.
We cannot afford to have panic in the financial sector.
RBZ needs to take measures which restore confidence in the banking sector. We cannot develop as a country when $2 billion is kept in pillows and under mattresses yet their country is facing severe liquidity shortages.
The confidence building measures should include ensuring that people get their cash on demand, payment of reasonable interest on deposits which will motivate people to save and ensuring banks are adequately capitalised.
Online Reporter