Harare, Zimbabwe (News of the South)-The government’s recent threats to arrest individuals whose companies deliberately refuse to bank their monies has drawn the ire of former Finance Minister Tendai Biti who says the move lacks economic sense.
Finance Minister Patrick Chinamasa recently threatened to withdraw operating licenses for companies that do not bank their money for fear that they won’t be able to withdraw it for use due to cash shortages in the country.
“The Reserve Bank of Zimbabwe (RBZ), through its Financial Intelligence Unit, has been positioning people at traders to find out cash sales of that day and how much was banked”
“We are going to intensify those efforts and it will not stop us from passing a law that any businessperson who does not bank money will have his licence withdrawn”
“We have instances where on a daily basis $1,5 million is received, but only $35 000 is banked and if it is bond notes, they are hoarding them to buy foreign currency on the black market and they must stop because we are going to take stern measures to bring these saboteurs to book,” said Chinamasa before adding that $104 000 worth of bond notes was expected to be circulating in the economy.
The move however has been ridiculed by Biti, currently the president of the People’s Democratic Party (PDP).
The lawyer said government’s selection of strong arm tactics revealed its dearth in economic ideas.
“Economies are not run on coercion threats extraction and capture. One thing that the cretins in ZANU never learn despite repeated failure”
“Why would any rational trader bank cash when one can’t get it out & when same now has a premium. Regime can’t criminalize rational behavior?’, he queried.
Biti went on to sarcastically deride the government for employing archaic systems in a modern economy alleging that “the peasants of Makoni thought they could reinvent economics. It’s 2007 deja vu “
Chinamasa also told MPs that some companies were being monitored daily and the culprits could have their trading licences cancelled.
“We have observed that most traders operating in businesses reserved for locals like public transport, retail shops, hairdressing salons and others are abusing their operations in the reserved sectors by not banking, and we will cancel their licences.”
“This is the greatest cause of queues for cash as both RBZ and banks will be required to withdraw foreign currency from nostro accounts to meet cash requirements”
“Non-banking of cash by major traders is also causing cash shortages and queues and this indiscipline is counter-productive and cannot continue to be tolerated as money is like blood and needs to be circulated for the economy to survive,” Chinamasa said.
Fear of failing to access their cash when they need it later is causing many companies to withhold cash from banks worsening the already acute cash crisis in the Southern Africa country.
Liquidity challenges have persisted in Zimbabwe despite the government’s splashing of bond notes, which have been pegged at a value equal to the US$.
The public’s trust and confidence in the new surrogate currency has steadily waned even after a stable acceptance that had the Reserve Bank and Government officials purring with delight in the earlier days after the injection.
Currently some people have resorted to ‘selling’ the US$ on the black market effectively corroding the flimsy value still retaining in the bond notes.
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