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Zimbabwe is definitely getting it right on the measures it is taking to ease the shortage of cash while at the same time encouraging banking of money. It is a fact that the shortage of cash in the country was largely as a result of businesses that were siphoning the US dollar out  of the country instead of banking the money.

This prompted the Reserve Bank of Zimbabwe to come up with a raft of measures to address the cash shortage that included among others promoting the use of plastic money as opposed to cash as well as limiting withdrawals.

The central bank also encouraged businesses to install point of sale (POS) machines to promote the use of plastic money.

The Minister of Finance and Economic Development Cde Patrick Chinamasa and the RBZ governor Dr John Mangudya have both confirmed increased banking as a result of measures that have been put in place.  Minister Chinamasa said the financial service sector now holds $6,1 billion in deposits and he attributed this increase to the use of plastic money and electronic money platforms.

The Minister said members of the public and the businesses had shifted to the use of plastic money and Real Gross Settlement transfers. “There is no way you can have physical cash of $6,1 billion and even in the United States, it is only 10 percent of virtual money,” said Minister Chinamasa.

Dr Mangudya said the foreign currency headache was common across Africa hence withdrawal limits were not unique to Zimbabwe. He said fellow African countries such as South Africa, Zambia and even the US were limiting withdrawals in order to manage financial flows. Zimbabwe in 2009 adopted the multi-currency system and as such foreign currency is readily available hence some unscrupulous businesses were taking advantage of the system to siphon the US dollar out of the country.

It is encouraging to learn from Minister Chinamasa that there has been a sharp increase in the use of point-of-sale machines. We want at this juncture to implore government to take the lead in installing POS at all government and quasi government departments.

We do not understand why it has taken this long to install POS at the tollgates where Zinara is collecting money every minute if not second from the motoring public. Financial institutions on their part should continue to review their banking charges downwards so that even those in the informal sector are encouraged to bank their money.

Increased cases of individuals losing large amounts to robbers are a confirmation that many people are still reluctant to bank their money. These individuals continue to keep large amounts of money at home or business premises despite the risk of losing the money to robbers.

Cash shortages adversely affects the economy as no investor would want to invest in an economy experiencing cash shortages. The monetary authorities should therefore continue to review measures that have been put in place to curb illicit financial outflows in order to plug any loopholes.