Diamond Trust Bank banner | Coastweek


THE MOST FROM THE COAST !

..


 Coastweek website


XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Zimbabwe military defers paying soldiers following cash shortages

HARARE Zimbabwe (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 Xinhua Saturday.

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 14, respectively.

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 October.
.

UPDATES:

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 for individuals.

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 region.

While the reduction of charges have been welcomed, many other people still think that the charges are still high and should be scrapped altogether.

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 basis.

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 unaffordable.

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 moratorium).

"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 South Africa.

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 of clients.

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 bank.

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 transactions.

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 2014.

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. dollar.

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 development.

"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".
.

SEE ALSO:

Zimbabwe cuts bank charges to promote use of plastic money

             

 

Remember: you read it first at coastweek.com !


 

TO ADVERTISE ON THIS WEB SITE:  www.coastweek.com
Please contact

MOMBASA - GULSHAN JIVRAJ, Mobile: 0722 775164 Tel: (+254) (41) 2230130 /
Wireless: 020 3549187 e-mail: info@coastweek.com

NAIROBI - ANJUM H. ASODIA, Mobile: 0733 775446 Tel: (+254) (020) 3744459
e-mail: anjum@asodia.co.ke

 
    © Coastweek Newspapers Limited               Tel: (+254) (41) 2230130  |  Wireless: 020 3549187  |  E-mail: info@coastweek.com