ATMs not meant for distressed economies like Zimbabwe’s


If it were a riddle, it would go something like this. “When does a person suddenly become seven people without using any magic wand?”

The answer would be: “When one wants to withdraw $5 million from an automatic teller machine (ATM).”

Though the man who invented the modern day ATM, Don Wetzel, came up with the idea while waiting in line at a Dallas Bank way back in 1968, queues are the order of the day at most ATMs in Zimbabwe.

While queues are usually unbearable during the last two weeks of the month, they now seem to have become routine as the purchasing power of the local currency has plummetted with bread costing $25 000 a loaf, and some people, including students coughing up $60 000 a day on transport alone.

To make matters worse, most commercial banks now insist that people intending to withdraw small amounts, which is anything up to $5 million, should use an ATM and not bank tellers. If they do, they are charged a penalty.

While ATMs should normally be faster than human beings since there is no chit-chat, most ATMs are down, half the time. Some will only be giving account balances but not dispensing cash.

At the few that are working, the number of people in the queue can be misleading because if they all want to withdraw more than $1 million they have to make multiple transactions.

And it looks like there is no immediate solution as the present crop of ATMs was obviously not meant for distressed economies like Zimbabwe’s.

Frank Read, director of the Bankers Association of Zimbabwe said the current crop of ATMs can only dispense 40 notes at a time. With the highest denomination being $20 000, one can only withdraw a maximum of $800 000 per transaction.

While some banks have daily limits of $5 million, one has to make seven transactions to withdraw that amount. And they are taken as such, which means one is charged stamp duty seven times.

According to Read, however, though charges for ATM transactions and over the counter withdrawals differ from bank to bank, it is generally cheaper to use an ATM.

While the inventors of the ATM wanted to provide a 24- hour service, and most notices at local ATMs claim this, very few dispense cash throughout the day. This has led to speculation that the country does not have enough cash. But Read says there is no cash shortage in the country.

“There is no cash shortage in Zimbabwe,” Read said. “There is a high demand for cash transactions in the economy especially at month-ends. Banks have responded by restocking the ATMs frequently.”

Demand for local currency has soared because of the rapid decline in its value. The highest denomination, $20 000, which in most currencies should be able to meet one’s daily needs, is not even enough to buy a loaf of bread.

According to the Consumer Council of Zimbabwe, an average family now needs $9.7 million a month for its basic needs. This translates to an average of $322 000 a day.

Any housewife will, however, tell you that $300 000 will not take you anywhere. The CCZ basket is too conservative. For example, it assumes that a family of six only has to consume 8kg of meat a month and four tabs of bathing soap.

Demand for cash is likely to soar as inflation continues to escalate putting more pressure on ATMs. It reached a new high of 360 percent last month and is likely to rise further because of the falling dollar, especially in view of the pending senate elections which are likely to see government pumping out more money than was budgeted for.

The only limitation to the demand for cash is that most Zimbabweans do not have it. Some workers are still earning less than $1 million a month while the average wage is reported to be about $3 million a month.


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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