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Zimbabwe battles cash woes as people reject alternative currencies

By Nqobile Bhebhe
Posted on Tuesday, 19 July 2016 13:55

The United States dollar, although in short supply is the highest circulating currency in Zimbabwe following the adoption of a the multi-currency system in 2009.

we have witnessed an increase in the usage of plastic money

The survey has been prompted by low uptake of other currencies despite a directive that banks and retailers should start trading in all currencies in the basket effective July 1.

Currencies facing resistance include the Chinese yuan, euro, British pound, Botswana pula, Australian dollar, Indian rupee and Japanese yen.

Reserve Bank of Zimbabwe (RBZ) deputy Governor Khupukile Mlambo said initial findings indicated that the market was still preferring the US dollar.

“We are carrying out a survey to determine the uptake, which will be concluded by next week, but initial stages shows that there is no improvement on the uptake of other currencies,” he said.

“But we have witnessed an increase in the usage of plastic money.”

The RBZ is rolling out an ambitious electronic monetary transaction drive with a target of 80 percnt usage within five years.

But the biggest challenge to the campaign is that the majority of Zimbabweans don’t have bank accounts, several surveys have shown.

The monetary authorities had hoped financial institutions could entice Zimbabweans to bank through a cocktail of measures that include use of modern technology. However, that project hit a brick wall as the cash crisis worsened early this year.

The overnment compounded the crisis by announcing plans to inject a new form of currency called bond notes in October. The bond notes will circulate alongside the US dollar and other currencies.

RBZ statistics indicate that in 2015, the value of mobile and internet-based transactions rose by 32 percent to $1, 6 billion from $1, 2 billion the previous year.

The inancial sector is planning to increase the number of point of sale machines from about 18 000 machines to 30 000 machines to reduce reliance on cash by the transacting public.

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