By Kuda Chideme, HARARE, July 14 (The Source) – Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya on Wednesday told a business symposium organized by the University of Zimbabwe that the country had received $2,8 billion in foreign currency receipts between January and June.
By Mangudya’s own admission, $2,8 billion is not small change. It is 70 percent of the country’s $4 billion budget for 2017. As expected, there were questions……Wouldn’t that much money improve our liquidity situation? Why then are we still in this mess, spending half the day (or half the night) stuck in bank queues just to access some $40 or $30?
Mangudya’s response to the hall full of university students, lecturers, business leaders and journalists was simple though he was agitated (anyone who has had an audience with the governor will know how easily he gets wound up when tough questions – no matter how polite – are posed at him).
“Out of $2,8 billion, $800 million was allocated through the RBZ and the other $2 billion was allocated through the banks. Then you go to any bank and they tell you we have no money and yet they have access to $2 billion not us (RBZ). It appears that the 30 percent ($800 million) we are managing ourselves has more impact. Although 70 percent ($2 billion) was better than 30 percent. That’s why, as RBZ, we keep monitoring banks. That money doesn’t belong to the Reserve Bank of Zimbabwe or banks but to people of Zimbabwe,” he said.
Mangudya said the banks were holding onto the money and would rather not release it for some reason.
The governor would know what he is talking about right? When cash shortages surfaced towards the end of 2015, authorities said this was a temporary situation. But this has developed into a full blown crisis.
So maybe all of the 19 banks operating in Zimbabwe enjoy seeing their halls packed with crowds of people demanding their monies? This probably could be a much more profitable business model than the traditional one considering that the banks are still making money despite the crisis.
Or perhaps the governor could have mixed up his numbers. Looking through the governor’s power point presentation, there is no mention of ‘Foreign Currency Receipts’ in all of the 22 slides.
To breakdown the governor’s numbers, Zimbabwe’s ‘Foreign Currency Receipts’ come from exports (60 percent), Diaspora Remittances (28 percent), Foreign Direct Investments (5 percent) and External loans, 8 percent (the total actually comes to 101 percent, but why quibble about the 1 percent?)
Going by this Zimbabwe would have earned $1,6 billion from exports, our friends and family in the diaspora would have sent some $784 million back home and the country would have attracted some $140 million in foreign direct investment (FDI) as well as accessing $224 million external loans.
Based on last year’s data, $1,6 billion worth of exports by half year is attainable given that between January and September, last year the country had earned $1,8 billion in exports. According to Zimstat, exports had grossed some to $724 million by March this year.
Official data, however, shows that during the first quarter Zimbabwe received $180 million in diaspora remittances so assuming that all things are equal that amount would have doubled to some $360 million by half year. But according to the Governor’s figures remittances at $784 million have already surpassed the full year projection of $750 million in only six months.
Central bank figures on FDI show that net foreign direct investment was $254,7 million against $399,2 million in 2015 so $140 million FDI in the half year could mean an improvement in the full year but still illustrates weak investor sentiment.
So, are the banks holding on to all the money? A half-year report on the banking sector by local brokerage firm, IH Securities shows that of the $160 million in bond notes so far released by the central bank into circulation, banks only held $9 million worth as of April.
Zimbabweans, who still have fresh memories of the horrors of hyperinflation, prefer to hold on to their cash. Their insistence on physical cash is proving a headache for the RBZ and banks in general.
But if, less than eight years ago you pushed a wheelbarrow full of money to buy a loaf of bread, you would understand the anxiety.