JOHANNESBURG – Zimbabwe has grappled with cash shortages since April 2016, largely due to externalisation and the hoarding of money. Reports suggest that roughly US$3 billion was externalised to Mauritius, the Far East and Botswana between the period of 2015 to 2017.
In a massive bit to stabilise a fragile Zimbabwean economy, newly inaugurated Zimbabwean President, Emmerson Mnangagwa last week named a new cabinet, which comprises of both new and old political faces.
In his inauguration speech on November 24, President Mnangagwa pledged that his government would resolve the countries cash shortages.
“In the immediate, the liquidity challenges which have bedeviled the economy must be tackled head-on and must be dealt with as a matter of urgency.”
“People must be able to access their earnings as and when they need them,” Mnangagwa said.
Since assuming his Presidency, Mnangagwa has granted a three-month moratorium for individuals and companies which have externalised cash and assets in a bid bring them back. The said amnesty period kicked off on December 1, 2017.
The Zimbabwean government will allow for individuals and companies hoarding cash inside Zimbabwe to bank their money without prosecution. This is a massive bit toend currency shortages. The Reserve Bank of Zimbabwe will further increase cash imports
In an interview with The Sunday Mail last week, Governor of the Zimbabwean Reserve Bank, Dr John Mangudya said the following measures on externalised cash would vastly improve the country’s liquidity.
“The measures being put in place to actualise this commitment include confidence-building policies enunciated by the President at the inauguration ceremony. The policies include opening up of the economy to enhance business footprint in the country, dealing with fiscal consolidation, enhancing exports and diaspora remittances, accelerating the re-engagement process and building a disciplined society.
Mangudya noted the importance of investor confidence in Zimbabwe, “confidence-building is critical as it gives impetus to the efficient circulation of money within the economy, and is, therefore, a prerequisite to improve the availability of cash at banks,” he said.
“Amnesty granted by the President in respect of illegally-expatriated cash and assets is expected to increase cash availability once the funds start to flow into the economy.
“Government, through the Reserve Bank, is working on a similar amnesty to deal with cases of in-country hoarding of cash at homes. Hoarding of cash is counter-productive as it reduces the circulation of money. Hoarding has a cash-hemorrhaging effect on the economy, Mangudya said.
The Reserve Bank has also increased the importation of cash using part of the Nostro Stabilisation Facility proceeds.