The Reserve Bank of Zimbabwe (RBZ) is deeply worried that only 50 companies in the country own half of the $19 billion bank balances in the financial services sector, even as the country plans to introduce new $5 notes and $2 coins in two week’s time, in a prolonged battle to ease cash shortages in an inflation-ridden economy.

The Reserve Bank of Zimbabwe Governor, Dr John Mangudya, announced this while addressing the media after presiding over the Monetary Policy Committee (MPC) in Harare, Tuesday, expressing fear that cash shortages have resulted in barons charging premiums of up to 60 per cent, “leading to the unscrupulous breaking of the law with two-tier pricing for digital money and cash.”

He also noted that a situation where 50 firms control half of bank balance posed a high risk of manipulation and pushing up of exchange rates on the parallel market.

“Almost 50 per cent of the total $19 billion bank deposits are held by only 50 companies, which means the rest of the populace has little amounts in their bank accounts. The central bank, therefore, needs to closely monitor the flow of money from these accounts to avoid risks which may lead to the spiralling of the exchange rates,” he said.

This is coming on the heels of public outcry against Zimbabwean authorities for allegedly allowing certain individuals and firms linked to the ZANU-PF-led administration to engage in illegal foreign currency dealings with no consequences against the culprits.

For example, media reports confirmed that last month, RBZ’s Financial Intelligence Unit closed in on the accounts of Sakunda Holdings and its subsidiary firms amid concerns they were heavily involved in illegal foreign currency dealings. But there were concerns that the move was ostensibly to facilitate an “analysis” into the operations of the companies. Yet, nothing of any findings has since been placed in the public domain, raising further fears some authoritative figures could be complicit with illegal goings-on within the system.

Sakunda Holdings owner, Kuda Tagwirei, is a close ally to President Emmerson Mnangagwa.

Explaining the rationale for injecting additional cash into circulation, the governor said it is designed to effect an upward review of daily withdrawal limits, details of which will be announced later.

And to douse fears of further inflation, he reassured that more cash will not fuel inflation. His words: “When you are substituting your cash for plastic money, you don't increase inflation, but it will help the population . . . to the extent that people are going to use their money without being charged premiums.”

•Excerpted from New Zimbabwe (London) and The Herald (Harare)

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