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Harare gives banks week to clear cash queues
Nokhutula Sibanda, Zim Online
January 23, 2008

http://www.zimonline.co.za/Article.aspx?ArticleId=2588

Finance Minister Samuel Mumbengegwi on Tuesday ordered bank executives to clear queues within a week or face stern action as Zimbabwe struggles to end a three-month cash shortage that has seen thousands of people spend long hours at banking halls queuing for cash.

The cash shortage that analysts say is chiefly the result of an acute economic crisis blamed on President Robert Mugabe's policies has persisted despite the Reserve Bank of Zimbabwe (RBZ) injecting new, higher denomination bank notes into the market last week.

At a meeting with bankers held at the RBZ's Harare head office, Mumbengegwi blamed the cash crisis on the executives he accused of engaging in what he called "non-banking activities."

Mumbengegwi did not say what the non-banking activities were but the term is often used to refer to illicit trading on the illegal but lucrative black market for foreign currency.

In no nonsense mood, Mumbengegwi said: "Those queues have to disappear soonest before government resumes business next week because I will not defend you against (punishment)."

He said if the queues were not cleared, he would authorise the central bank to take appropriate action, adding: "Those who are tired of banking should get out of the sector voluntarily. If they don't, they will be pushed out."

Mumbengegwi's remarks came a day after RBZ chief Gideon Gono accused some banks of not collecting their cash allocations from the central bank, as they did not have equivalent sums or sufficient collateral deposited with the monetary authorities.

Mumbengegwi, who was elevated to the Exchequer in a mini-reshuffle last year, said his department would not address the exchange rate unless the speculative purposes prevailing in the economy stopped.

"Where on earth do you see an exchange rate based on speculation? Speculative behaviour must disappear immediately," Mumbengegwi said.

Gono, who was present at the meeting, warned he might have to order the closure of banks failing to play by the book.

"We have no intentions of killing any bank but if pressure continues I will find little excuse to reduce the numbers," said Gono, who four years ago forced several banks and other financial firms to close after they failed to meet standards.

Zimbabwe has experienced serious cash shortages since last October. The authorities blame the currency shortages on cash barons they say have siphoned off huge amounts of cash from banks - with the help of unethical bank executives - to the lucrative black market to fund fuel deals and foreign currency trade.

But analysts have dismissed this, finding fault with the government's economic policies, which have created a fertile ground for corrupt and illegal business practices by a minority while the majority suffers. - ZimOnline

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