ZIMBABWE’s finance ministry has given government departments and state-owned enterprises until June 30 to start processing payments in South African rand to relieve the shortage of US dollars, which most Zimbabweans prefer.
The rand was widely used in Bulawayo until it began losing value in 2014, and now most companies, traders, and government departments refuse payment in Rands.
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 the Rand.
Although Zimbabwe, which abandoned is worthless currency in 2009, officially allows most of the world’s major currencies to be used as legal tender, but most of the trading is done in US dollars. But now there is 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 then 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 big cuts in most bank charges with some being cut down by half on Tuesday this week,vwith many observers saying this could encourage lower-paid people in regular jobs to open bank accounts.
Electronic transfer between banks cost were R150 but now fees have been halved for withdrawals. But banks say they were reluctant to cut charges , which are their main source of income as few new loans are being granted because of the high risk factor.
According to The Source, which produces financial reports, 70 percent of Zimbabwean adults do not have a bank account with the central bank statistics showing that mobile money now accounts for nearly 90 percent of all transactions. – ANA edited by Patience Rusere