File: Money
HARARE – Zimbabwe’s finance ministry has given government departments and state-owned enterprises until June 30 to ensure they can process payments in South African rand in a move aimed at relieving the shortage of US dollars, the currency Zimbabweans prefer.
The rand was widely used in second city Bulawayo until it began losing value in 2014, and now most companies, traders, and government departments refuse payment in the South African currency.
Willard Manungo, permanent secretary in the finance ministry, wrote to government departments this week that accepting rand payments would help the government increase circulation of South African money.
Although Zimbabwe, which abandoned its worthless currency in 2009, officially allows most of the world’s major currencies to be used as legal tender, but the overwhelming majority of trade is in US dollars. However, there is now a critical shortage of US dollars.
“Government ministries, government departments, local authorities and parastatals are key players in the adoption of use of multi-currencies given the extent to which they transact with the public. In this respect, it is critical that such entities also adopt measures that facilitate restoration and promotion of the multi-currency system,” Manungo said.
Reserve Bank of Zimbabwe governor, John Magudya, has described the multi-currency system as “dysfunctional”, especially since consumers rejected the rand.
The central bank says rand usage is down to less than five percent from nearly 50 percent when multi currencies were adopted in 2009 after the Zimbabwe dollar was abandoned.
In another effort to ease the shortage of US dollar notes and increase numbers of people with bank accounts, the central bank announced dramatic cuts in most bank charges Tuesday.
Some charges have been cut in half with many observers saying this should encourage lower-paid people in regular jobs to open bank accounts.
Previously an electronic transfer between banks cost R150 and this fee has now been halved as have fees for withdrawals.
Banks said they were reluctant to cut charges which are the main source of income as few new loans are granted at present because of the high risk factor.
The Source, which produces financial reports from Harare, says that 70 percent of Zimbabwean adults do not have a bank account. Reserve Bank of Zimbabwe statistics say that mobile money now accounts for nearly 90 percent of all transactions.
