Cash situation improves, says RBZ

23 Mar, 2018 - 00:03 0 Views
Cash situation improves, says RBZ Kupukile Mlambo

eBusiness Weekly

Africa Moyo
The cash situation has marginally improved compared to the situation that obtained in the last two years, mainly because of the surge in export receipts, the Reserve Bank of Zimbabwe (RBZ) says.

Zimbabwe has been battling untold paper money shortages since March 2016, resulting in depositors spending nights in queues at banking halls in a desperate bid to better position themselves for the next day.

However, a combination of increased exports and efforts by the RBZ to promote the use of plastic money, has seen dire cash demand by depositors largely declining across the country.

RBZ deputy governor Dr Kupukile Mlambo says the cash situation has markedly improved, and can only get better in future as more firms turn to the export market.

“I think to be fair, the cash situation has improved slightly; it is not what it used to be.
“That is not to say there are no challenges, obviously there are still there (and) for me, as long as we are dollarised, the solution to cash shortages is increasing exports,” said Dr Mlambo in London last week during the Zimdaba conference.

The two-day Zimdaba London 2018 conference was organised by United Kingdom and Zimbabwe-based Consolidated African Services (CAS).

Dr Mlambo said bond notes — which were introduced on November 28, 2016 — have largely been responsible for pushing up exports.

Given that Zimbabwe is using foreign currencies such as the US dollar and South Africa’s rand, it cannot print the money and solely relies on revenue generated from exports to fend off the cash crisis.

Bond notes were introduced by the RBZ as an export incentive in as attempt to make local products competitive on the international market.

Large and small-scale exporters were getting an incentive of between 2 percent and 5 percent respectively for the value of their exports.

Since inception, the export incentive has enhanced the competitiveness of the country’s exports.

This has seen exports growing by 36 percent from $2,8 billion in 2016 to $3,8 billion in 2017.

In the last three months alone, export receipts are understood to have increased by 23 percent.

Dr Mlambo said the export incentive payable in bond notes has become popular among exporters to the extent that others now want the facility to be increased to 25 percent.
From May 2016 to December last year, the RBZ has paid $297 million as an incentive to exporters.

Exports are critical to the economy, not only in so far as they help the country meet its international obligations, but also because 62 percent of liquidity comes from exports.
Gold, tobacco, platinum and other minerals, are the biggest magnets of foreign currency for Zimbabwe .

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