Chinamasa explains why there are cash shortages- says net is closing in on traders in reserved sectors

Strategies to address cash shortages

Mr. Speaker Sir, Government, through the Reserve Bank, is advocating for the use of plastic money in order to ameliorate the mismatch or gap between electronic salary transfers and the demand for cash from banks. Embracing plastic money preserves foreign exchange in the Nostro Accounts for use of foreign payments whilst at the same time mitigating against non-banking of cash by traders. Government is also considering removing the 5c tax on plastic money in order to reduce the cost of transacting.

The non-banking of cash by traders is currently being attended to by the Reserve Bank and the police under the Bank Use Promotion Act [Chapter 24:24] which compels traders to bank their surplus cash on a daily basis when banks are open for business. Best practice is that traders in the reserved sectors of the economy should be locals as is required in terms of the Indigenisation and Economic Empowerment Act. These reserved businesses include the following:-

·       Transportation, passenger buses, taxis and car hire services;

·       Retail and wholesale trade;

·       Barber shops, hair dressing and beauty salons;

·       Employment agencies;

·       Estate agencies and Real Estates;

·       Bakeries;

·       Grain milling;

·       Tobacco processing;

·       Advertising agencies; and

·       Provision of local and craft, marketing and distribution.

In Zimbabwe, the opposite is true and as a result we have noted with great concern the deliberate disregard to the laws of the land by these traders. Such unscrupulous traders should not continue to enjoy the freedom of being in the reserved sectors without compliance. The net is closing on those players who continue to disrespect our laws.

Conclusion

Mr. Speaker Sir, the factors underpinning cash challenges are beyond banks. Banks find themselves in a difficult position where they are compelled to ration cash withdrawals in order to meet their customers’ demand. Banks have, therefore, continued to explore pragmatic measures to meet their customers’ demand for cash.

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