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Gono introduces new notes and blames govt chefs for cash shortages
Lance Guma, SW Radio Africa
December 20, 2007

In an effort to stem the shortage of hard local currency Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono announced on state radio and television on Wednesday that he was introducing higher denominations of banknotes with immediate effect. The new denominations are Z$250,000, Z$500,000 and Z$750,000. The Z$200,000 notes that were introduced last July become worthless on December 31st. Gono blamed the cash shortages that have gripped the nation on corruption by senior government officials- specifically in tourism, agriculture, manufacturing, industry, banking and politics.

He said: "Our economy has fallen prey to a high level of indiscipline and corruption prevalent in the economy as well as diminished economic patriotism on the part of most people holding positions of authority in our economy and society."

Bulawayo based economist Eric Bloch described Gono's effort as a "good move but not a solution." He believes it might cure the immediate problem of cash shortages but the problem of hyperinflation remains. Zimbabwe has the highest inflation rate in the world, officially estimated to be close to 10,000%. However, experts say it is actually closer to 100,000%. With a rate like that it will be a very short time before the cash shortages are back.

Bloch said the RBZ chief is correct to a degree when he blames the cash shortages on corruption by senior officials. He explained that many officials in powerful positions have been very active on the black market, collecting vast amounts of cash to facilitate their huge deals. But the economist said hyperinflation remains the single biggest problem.

The December 31 deadline given by Gono means that anyone who hasn't changed their old Z$200,000 notes by then loses the money. Bloch was concerned for those who are out of the country for the holidays and will be returning after the stipulated deadline. They will lose any notes they took with them to pay for customs duties or toll bridge fees. Those who live in remote rural areas where there are no banks will also suffer losses if they fail to secure transportation to the nearest towns to change their cash.

Our Harare correspondent Simon Muchemwa visited several banks in Harare on Thursday afternoon and did not find any of the new notes. Many banks remained open past their usual closing time but people still waiting in the queues were told to go home after 6:00 P.M. as no new notes had been delivered.

Muchemwa said there was a fleet of RBZ trucks at the Central Bank headquarters loading huge stacks of notes. He discovered though that they were headed for rural areas around the country.

Muchemwa said some shops, especially those that are Chinese and Nigerian owned, are already refusing to accept the old Z$200,000 bearer cheques. Our correspondent criticised the RBZ Governor for failing to arrest the corrupt business people and senior officials that he blamed for the cash shortages.

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