Letztes Update:

The Zimbabwe Cash Shortage Causes and Solutions


Zimbabwe has been battling cash shortages since 2015 and every measure introduced by the central bank fails to stem the crisis. Zimbabwe's cash shortages cannot be understood in isolation of deep seated political and governance challenges which have continued to usher in bad policies in complete disregard of basic economic fundamentals. Cash shortages are therefore a symptom of failed nationalistic and populist political strategies. Below are some of the key causes of the cash shortages:
Unenviable and un-inspiring political climate – Zimbabwe’s political climate for the past years has been tense and unpredictable due to bad governance, human rights violations, corruption, ill-thought and ill-advised policies and laws. As such, industries have collapsed; the country’s Foreign Direct Investment is among the lowest in sub-Saharan Africa. There has been no significant economic growth and development for more than a decade, no new money has been created.
Flawed monetary and economic polices such as Creation of fictitious currency of bond notes – Zimbabwe has no currency of its own after printing its own Zimbabwean dollar out of existence. It now claims to be a multicurrency economy, however, USD$ as expected has grown to be the leading medium of exchange. Realizing that the USD$ was a powerful currency for a weak economy, Zimbabwe Government introduced bond notes, a fictitious currency with a fixed 1:1 exchange rate to the USD$. The bond notes drove away the USD$ as Zimbabweans stampeded to horde the USD$ as a reserve currency. Hordes of USD$ can be found in black market forex dealers. The bond note now trades at 45% against the USD$, a rate which the government of Zimbabwe does not wish to acknowledge. 
‘Captured’ central bank - undue political influence and interference in the operations of the central bank which has led to introduction of monetary policies that are in tangent with existing market realities. The central bank has grown to be a partisan entity, used to promote and finance the interests of the ruling ZANU PF.
Exponential de-industrialization - Zimbabwe has been on a de-industrialization spiral for the past two decades. Industry capacity utilization and productivity continue to nosedive. As such, exports have tremendously declined while imports balloon. This means more money continues to leave the country with less flowing in. It proving to be difficult to create new money.
Corruption and Illicit dealings – In Zimbabwe huge quantities of money disappear and cannot be tracked. In 2015, Zimbabwe lost USD$15bn in diamond revenue, which the government professes ignorance of.  
 Fiscal indiscipline – Being broke the government of Zimbabwe resorted to excessive borrowing utlising its overdraft facility and issuance of Treasury bills. The overdraft facility which entailed the RBZ would through the RTGS electronic system credit bank accounts of payment recipients. These transfers were of course not supported by cash reserve. These transactions increase deposits in the banking system, but without a concomitant increase in the quantity of US dollars available in cash or external (nostro) accounts. To finance the remainder of the deficit, the government issued T-bills, mainly acquired by commercial banks but also used as payment for services. Banking sector being used to finance the needs of the government closing out the genuine private sector players who need such resources to spearhead domestic investment
Fix the political climate to improve investor confidence and encourage domestic investment
Fix ease of doing business environment, remove the red tape
Tackle corruption mainly in government
Reduce government spending
Introduce and promote digital money
Remove government and politicians’ influence in the decision making process of the RBZ. Central bank should be free to come up with policies meant to resuscitate the economy and not support political agendas
Enhance fiscal discipline and fiscal responsibility to reduce government overspending and wanton abuse of the Treasury Bill facility.
Build confidence and trust, creating assurance of people with banking systems : Zimbabwe needs at least $760 million deposits to address the cash shortages
Remove the fixed exchange rate of the bond note against the UDS$

Fungisai Sithole