Cash shortages persist even after Z$250 million notes introduced

By Lance Guma
06 May 2008

Thousands of Zimbabweans are camping in queues outside banks while trying to withdraw their own, hard earned money. An economy ravaged by hyperinflation has meant there are not enough notes in circulation, even after the Reserve Bank introduced bearer cheques of Z$100 and Z$250 million into the system on Tuesday.

Whether the situation will ease up as the days progress remains to be seen. Last year in December the central bank introduced Z$250 000, Z$500 000, and Z$750 000 denominations. The following month in January higher denominations of Z$1 million, Z$5 million and Z$10 million followed. In April of this year Z$25 million and Z$50 million notes had to be introduced to try and ease the cash shortages.

The latest increases come as no surprise given the destructive economic policies adopted by Mugabe’s regime. Economic analyst Lance Mambondiani says a high inflation rate has meant Zimbabweans are unwilling to keep their money in the bank and this has contributed to the cash shortages. He says simply increasing denominations will not solve anything and that the root causes of the crisis have to be addressed.

Mombondiani traced the crisis to the destruction of the agriculture, tourism and manufacturing sectors, which in turn have meant low foreign currency inflows and accompanying high import prices. Ninety percent of business transactions are taking place in the black market, because of ill-advised price controls he said. Unless all those issues are resolved he expects the cash shortages to remain.