Cooking in queues as cash shortages worsen

By Lance Guma
19 Dcember 2007

Several families are leaving their homes armed with portable paraffin stoves to cook meals in the long snaking queues at the bank. The country is in the midst of a major cash crisis with the central bank failing to provide enough notes to meet demand. Pishai Muchauraya an opposition official in Manicaland said it’s now a common practice to see people cooking food to eat whilst queuing up to withdraw money. Teachers who work in rural areas and travel to the cities to get their money are some of the most affected groups. Banks are only allowing customers to withdraw Z$5 million per day whilst a trip for some could cost as much as Z$6 million. This Muchauraya says requires two days of queuing just to take care of the transport costs.

Reserve Bank Governor Gideon Gono assured Zimbabweans there would be enough cash for the Christmas period, adding the bank would remedy the situation. The reality however is different. Hyper inflation and an inability to introduce higher denominations have ensured there is not enough money in the system. Gono has in the past threatened to introduce a new currency and flush out so-called cash barons allegedly hoarding money. But as we reported this week there was confusion Tuesday as people anticipated this move. The Reserve Bank ordered financial institutions not to dispense cash or accept deposits. It was only in the afternoon when banks started releasing cash that it transpired there was no new currency, only new notes of the old Z$200,000 bearer cheques.

The central bank claims that as of November 15, Z$58 trillion cash was in circulation but that banks were only holding Z$1 trillion. This he said meant Z$57 trillion dollars is, ‘floating somewhere out there.’ Analysts however say with restrictions on withdrawals in place, customers are not motivated to bank their money, as they will struggle to withdraw it later. Hyperinflation has also discouraged savings and made it pointless to use the banking system. In Manicaland, Mucharauya told us wealthy businessmen running shops are raking in a fortune in selling their cash to desperate people. People under pressure to secure Christmas goodies for their families are buying Z$50 million in cash – but it’s costing them Z$80 million.