Chinamasa grilled in Parliament over cash shortages

Finance Minister Patrick Chinamasa

Finance Minister Patrick Chinamasa was today grilled about the cash shortages that continue to dog the new administration five months after it assumed office.

He, however, said people had to understand that the money that was being paid out electronically was not cash so if people transacted electronically, there would not be any problem.

Chinamasa said that 96 percent of the transactions in Zimbabwe were now electronic prompting a heated debate with Mabvuku-Tafara legislator James Maridadi that if the bulk of the transactions were now electronic those who need cash should therefore be able to get it.

Below is the full debate:

HON. HOLDER:  My next question is to the Minister of Finance and Economic Planning.  Could the Minister please update this House on the issue of cash flow problems, especially in the country, in the banks.  What is Government doing to ease the cash flow process? -[HON. MEMBERS:  Inaudible interjections.]-

THE ACTING SPEAKER:  Order Hon. Members.  I thought this was a very important question.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  Mr. Speaker Sir, Government recognises that there is a problem and also is fully aware as to the causes of that problem and these problems cannot be addressed overnight.  One of the problems – [HON. MEMBERS:  How many nights?]-

THE ACTING SPEAKER:  Order, order please.

HON. CHINAMASA:  Hon. Members need to be aware that when we pay their salaries through RTGs that is not represented by physical cash.  That they should know and the system will work perfectly for as long as all of us accept to transact business through electronic transfers.  As a matter of fact, Mr. Speaker Sir, because of this challenge we have now overtaken Kenya in terms of the number of transactions that are transacted electronically, through RTGs and through mobile.

The way to go, Mr. Speaker Sir, for all countries, developed or undeveloped, is that we are moving towards a cashless society and the challenges we have met through cash shortages has actually inspired our population to move expeditiously to a position where we are soon going to be a cashless society.  For instance, Mr. Speaker Sir, of the 97 billion transactions that have been transacted in this country, about 96% of those now are electronic.  All businesses in our retail shops is now electronic.  We have now been able to step up production and supply of point of sale machines from 45 000 and to the current 70 000.  Now, essentially I want Hon. Members to understand where we are going as an economy which is the case for all economies, whether it is India, China or the United States.  We are all going towards a cashless economy, but notwithstanding, Mr. Speaker Sir, His Excellency the President has directed both my Ministry and the Reserve Bank to find measures that can ameliorate this problem. I hope that some of the measures that we are considering, which we have not yet concluded will be able to be put into motion and produce a satisfactory outcome. I thank you.

HON. HOLDER: My supplementary question to the Minister is to say, irrespective of the effort that he has done, what mechanism has Government put in place in order for the banks to have credibility to ensure that the depositors know that their money is safe because right now what I am seeing out there is a nightmare. People are sleeping in the streets and 100 days have passed. Now, we are saying where are we going? Zimbabwe is open for business – [HON. MEMBERS: Hear, hear].

HON. CHINAMASA: I want to assure Hon. Holder and this august House that people’s money in the banks is very safe but you only need and I want to repeat and urge this august House to be more modern, and go along the path towards a cashless society. When you look at the number of cars using fuel, those cars are not buying cash. It is done electronically. Just see the hive of activity on our roads and shops, those shops are transacting – [HON. MARIDADI: On a point order, Mr. Speaker! The …] – electronically …

THE ACTING SPEAKER: Order, order Hon. Maridadi – [HON. MARIDADI: On a point order, Mr. Speaker. No, the Minister is going off tangent.] – Hon. Maridadi, you wait until you are recognised – [HON. MARIDADI: Yah, it is painful when the Minister is misinforming the nation.] – Order, please take your seat. You wait until I have recognised you. You do not just shoot. No, no you do not behave like that.

HON. MARIDADI: On a point of order. I wish the Hon. Minister could listen very carefully to me and to himself when he speaks. He says 96% of transactions are done electronically, that is cashless. The more reason why we must have cash, it means most of the transactions are now cashless. It means for the few transactions that require cash we must be able to have the cash. He gave Kenya as an example, Kenya does not have a cash crisis like Zimbabwe. In his admission, the Minister says we have actually overtaken Kenya in using other platforms which are not cash, more the reason why we must have cash Minister. Listen to yourself carefully when you speak.

THE ACTING SPEAKER: Hon. Maridadi, that is unparliamentary language that you are using – [HON. MARIDADI: I think when the Hon. Minister speaks, he must also listen to himself.] – Be respectful.

HON. MARIDADI: Okay, respectfully Hon. Minister, listen to yourself when you speak.

HON. CHINAMASA: Mr. Speaker Sir, I have been listening but the Hon. Member prefers also not to listen to what I said. What I said was – all our salaries in Government, $300 million of it every month is not represented by physical cash. Please get that clear. So, when you get money into a bank account you must not have the expectation that it would be paid out to you in physical cash. What I am urging Hon. Members here is that we should embrace the new culture to transact business electronically. That new culture is also good because it is a very good tool to fight corruption unlike where there are cash-based transactions.  The question Mr. Speaker Sir that I was asked …

THE ACTING SPEAKER: Order, order people to my left – [HON. MUNENGAMI: Hon. Speaker, I never spoke.] – Did I mention your name? – [HON. MEMBERS: Inaudible interjections.] – Take your seat. Do not force me to ask one of you to go out please. This is a very important question and you continue making noise, that is not fair.

HON. CHINAMASA: Mr. Speaker, thank you very much to those who have raised this issue. It is very important so that we understand the cause of the shortage. The causes of the shortage is that all our payments, certainly from Government and even from the private sector, are RTGs deposits into their bank accounts. Those deposits are not represented by physical cash – US$ or bond notes but as always, we embrace the electronic form of transfers  and business will move smoothly with minimum disruption to the economy which currently is the case.

Hon. Holder asked me a question – are people’s money in the banks safe and I said I can guarantee that those deposits are safe. The only problem is that you cannot withdraw $8 billion. Currently, the total deposits are $8, 7 billion. Now, there cannot be any expectation to withdraw $8, 7 billion in cash because that cash is not there. We do not have a currency of our own. We have to import US$ and we pay for importation of US$ in the same way that we pay for importing a car. We have to pay to the Federal Reserve of the United States of America.

The point I want to emphasise, I understand there is a problem but it is not to the extent that in fact people would want us to believe. True, whether people want to withdraw amounts and those are the people who are on the queues, yes there are challenges because the banks do not have the cash and these are issues that we are seeking to address. I hope that in the course of time, we should be able to find a solution but clearly, all the economies are now running on the basis of a cashless society and I do not think anyone of us here has been unable to transact for as long as you want to transact electronically. I thank you.

HON. HOLDER: My supplementary is that the Minister has explained eloquently but my question is – in the mining sector there is chrome, diamonds, gold and all sorts of minerals that have not been paid cash. What is happening to that money and why can we not have our own reserves of gold? Where is it going to? That is where my question is because you are being paid 70%. Of that 70%, 30% is going into transactions. So, the 70% is bond and some US$. So, I want to know. At the end of the day you are saying we cannot withdraw but we are mining and exporting, so where is that money going to?

HON. CHINAMASA: Mr. Speaker, I am very grateful to Hon. Holder for his question because it affords me an opportunity to explain very basic economics. As the august House will be aware,  we have been growing production of our gold from 12 metric tonnes in 2013 to 24.5 metric tonnes last year.  This year, we are anticipating or projecting to reach 30 metric tonnes.  Now, the question is – where is that money?

We are exporting gold and where is that money going? I can answer it in two ways.  First, he acknowledges and admits that the artisanal miners, not the primary producers; the artisanal miners are being paid for the gold that they deliver – 70% in US dollars.  In other words, 70% of the gold that we have exported and paid for in US dollars – we are paying the artisanal miners.  Some of the foreign currency that is earned through gold, gold is one of our major export earning items and a lot of that foreign currency goes to the importation of fuel, electricity and essential things that are necessary to drive this economy.  And, for the Hon. Member to try to say we should not have fuel and electricity because we are producing gold is I think very unreasonable.  I thank you Mr. Speaker.

HON. MAONDERA:  Thank you Hon. Speaker.  My supplementary question to the Hon. Minister is that, whilst he is saying we should go electronic in transacting as a way of alleviating cash shortages; surprisingly most Government departments are not electronic.  They are refusing swiping, they are refusing RTGS but are insisting on cash.  So, is it not hypocrisy that the Minister is saying we should be electronic yet the very same Government departments that he superintends on are refusing – [AN HON. MEMBER:  VID for example.] – So, how can that be operated?

HON. CHINAMASA:  Mr. Speaker Sir, I am again grateful for the question.  Not everyone whom we want to transact business with electronically has been able to do so and not through their own fault.  This has been an issue about the supply of point of sale machines which like I pointed out in my answer, we have now upped the supply from 45 000 to 70 000 and that should improve the extent to which we can transact electronically.  We are gunning to increase the supply to 120 000 point of sale machines; which means that anyone doing meaningful business will be required by law to transact their business electronically, which currently is not the case.