(Xinhua) -- The Zimbabwean government
has deferred June salaries for its army and security services by
two weeks while the rest of the civil servants, including
teachers and nurses will be paid next month, amid a biting cash
crunch in the economy.
This comes as the government has
been struggling over the past months to raise money for wages
due to severe revenue underperformance and a liquidity crisis
that has spawned cash shortages since March.
Permanent Secretary in the Ministry of Finance Willard
Manungo confirmed the postponement of the June salaries in a
circular dated June 16, 2016.
The cash flow challenges has necessitated the Minister of
Finance and Economic Development to propose pay dates for the
month of June 2016, which "allows for the mobilization of the
requisite resources," Manungo said in the circular seen by
Soldiers, who are paid on the 12th of each month, will now be
paid on June 27, the same for air force workers. Police will get
their salaries on June 30 while teachers, doctors and nurses who
are paid on the 20th will now get their salaries on July 7 and
Zimbabwe spends more than 80 percent of its budget on
salaries but the government has now targeted to reduce the wage
bill to 40 percent.
Due to cash flow challenges, the government has previously
deferred salaries for its workers by days but this is the first
time in recent history that it has shifted pay dates for
soldiers and the air force.
Following the cash shortages, the government has since
announced plans to introduce bond notes which will be backed by
a 200 million U.S. dollar Africa-Export-Import Bank facility in
Zimbabweans welcome fee
drops to facilitate use of plastic money
HARARE Zimbabwe (Xinhua) --
Zimbabweans have welcomed the new set of
reduced bank charges announced by the central bank this week to
stimulate the use of plastic money following crippling cash
shortages in the economy, but some say the charges remain high.
The charges were reduced following an agreement by the
regulator, the providers of payment platforms and the Bankers’
Association of Zimbabwe.
Electronic funds transfer now cost between 33 cents. ATM
withdrawals cost a maximum of 2.50 dollars, Point-of-sale (POS)
transactions of up to 10 dollars now cost 10 cents while those
above 10 dollars will cost 45 cents at the most.
POS user charges have also been scrapped and merchant service
commissions will not exceed one percent for local transactions;
and monthly administration charges will be capped at 5 dollars
There has been a rise in the number of POS machines to 17,448
by April 2016 from 4,258 in 2012, partly as a result of a
government directive last month for government ministries, state
entities and local authorities to install POS machines.
"The long awaited fees reduction is expected to increase the
use of electronic banking services as the country deals with a
cash shortage which has been exacerbated by Zimbabweans refusal
to take up cash alternatives that have always been too
expensive," said Techzim, a respected website dedicated to
information technology news in Zimbabwe and the southern Africa
While the reduction of charges have been welcomed, many other
people still think that the charges are still high and should be
Questions also linger on whether the number of people with
access to banking services or even use of plastic money has a
telling effect on the movement of cash in the banks in the face
of a highly informal economy where services are traded on a cash
It is estimated that about 70 percent of the country’s adult
population does not have bank accounts, according to a survey
done in 2015.
Adults above the age of 15 comprise about 60 percent of
Zimbabwe’s population of 14 million.
Of the 70 percent of the unbanked, 74 percent of them
dismissed a bank account as being either unnecessary or
Contributors on social media have expressed mixed feelings
over the reduction of the charges with one user named Brian
saying that they should be reduced further.
"Well they still need to reduce.
"I’m based in SA, I swipe for free.
"Most banks do that.
"I can swipe for a loaf of bread for 12 rand for free," he
said before ZimBanker responded asking him if he knew what the
Merchant Services Commission was in South Africa.
"It is higher than in Zimbabwe (before this 1 percent
"There is no such thing as a free lunch.
"Someone has to pay!"
Another contributor responded saying that the fact remained
that he did not get charged for swiping and making transfers in
Zimbabwean man Phillip Munyaradzi said the latest initiative
still fell short of expectations.
"Most banks have stopped dispensing cash at ATMs.
"Most retailers don’t have POS machines, most Zimbabweans
don’t have cards to swipe.
"So there is a lot to be done, a lot more!" he said.
Techzim also recommended various ways with which to deal with
the cash crisis, including the use of cards to pay for utility
charges and fuel and to get cash back at POS.
Economists and the Reserve Bank of Zimbabwe (RBZ), or the
central bank, are advocating greater use of plastic money, with
the latter intending to make 80 percent of monetary transactions
to be via plastic money in the next five years.
However, while plastic money has worked in the formal sector,
many people are still to accept its reliability especially after
previous bank failures which wiped out the accounts of millions
The current cash squeeze, too, does not give the people
enough confidence to open bank accounts.
In fact, the number of people using banking products declined
in 2015, with only 14 percent of micro, small and medium
enterprises being formally banked, according to the central
About 80 percent of local transactions were being done in
cash as people shunned banks.
Many companies also pay their worker’s salaries in cash,
by-passing the formal banking system mainly because they will be
dodging statutory taxes.
RBZ Governor John Mangudya also noted that while many shops
offered points-of-sale facilities using plastic money, many
Zimbabweans still preferred to deal in cash.
Some retailers are also reluctant to embrace plastic money,
noting the delays they encounter in accessing their cash after
Monetary authorities are mulling various other ways of easing
the cash crisis, including the introduction in October of the
much maligned bond notes in denominations equivalent to 2 U.S.
dollars, 5 U.S. dollars, 10 U.S. dollars and 20 U.S. dollars.
The notes, which are being printed in Germany, will be backed
by the same 200 million US dollar Africa Export Import Bank
facility used for the bond coins already in circulation since
The coins were introduced to deal with the problem of small
change and enable retailers to round down prices which had
hitherto been rounded up for maximum profit.
While people have gained confidence in the bond coins and now
prefer them to the rand, they are not so sure about the bond
notes and have continued to ridicule them on social media.
IMF has said it is studying the proposal by Zimbabwe to
introduce the bond notes, but President Robert Mugabe said last
week that bond notes were the way to go.
He said this would deter "crooks" from spiriting away the
much sought after US dollar which they currently have access to.
The country abandoned its currency in 2009 after inflation
reached an official figure of 231 million percent, although
independent analysts put the figure at more than 4 billion
percent, and has over the years adopted nine currencies - the
yuan, South African rand, Botswana pula, pound sterling, Indian
rupee, euro, Japanese yen, Australian dollar and the U.S.
Until late 2015, the rand was also widely used alongside the
U.S. dollar, but Zimbabweans now shun the South African currency
because of its volatility against the greenback.
China pledges to support
Zimbabwe overcome economic difficulties
HARARE Zimbabwe (Xinhua) --
China has pledged its continued support to
Zimbabwe to help the drought-ravaged southern African country
overcome economic difficulties.
Zimbabwe is in the throes of a serious economic crisis
characterized by slow growth, company closures, low foreign
investment and a biting liquidity crunch that has caused cash
shortages since March.
An El-Nino induced drought has also left up to 4 million
people in need of food aid, putting more pressure for funds on
the government that is already struggling to pay its workers.
Visiting Chinese Vice Minister of Foreign Affairs Zhang Ming
told journalists after a closed door meeting with President
Robert Mugabe in Harare that China remained steadfast in helping
Zimbabwe to achieve an economic turnaround for socio-economic
"China is confident in the capability of the government and
people of Zimbabwe in overcoming current difficulties and
restoring health development of the economy.
"We will continue to work hand in glove with brothers and
sisters of Zimbabwe to ensure the economic and social
development of Zimbabwe," Zhang said.
He said following the drought, China had donated 22 tonnes of
rice to Zimbabwe worth 160 million yuan to help alleviate hunger
in the country.
Officials from both countries were now having close
coordination to have the rice shipped to Zimbabwe to assist
those in need as quickly as possible, he said.
Zhang said the meeting touched on progress being made in
implementation of various cooperation agreements agreed by
Mugabe and Chinese President Xi Jinping in 2015, which include
construction of a new parliament building in Zimbabwe by China
as a donation.
The Chinese vice minister said China had already completed
the design of the new parliament building and submitted three
design plans to Zimbabwe for consideration.
"We are waiting for the confirmation from Zimbabwe side for
the early launch of this project," he said.
Among other cooperation projects, China is funding a power
expansion project to add 300 megawatts, Harare water treatment
system upgrade and recently completed the upgrading and
expansion of Victoria Falls at a cost of 150 million U.S.
dollars. The new airport which is already in use is set for
commissioning this year.
China, he added, was committed to deepening and further
developing the friendly and cooperation relations with Zimbabwe.
"The two countries are confident that with the solidarity and
cooperation of our two countries, we have every capability to
overcome all difficulties and sustain our economic and social
development in the future".
Zimbabwe cuts bank charges to promote use of plastic money