Zimbabwe banks run out of cash after ruling

“Parts of the city centre were impassable today because thousands of men and women were thronging streets outside banks trying to access their cash,” said John Mapingure, a taxi driver in Harare.

“People are clamouring for their money. No one has cash, leaving people completely desperate,” he said.

Banks had not been allocated enough cash to meet consumer demand, Chipo Sakupwanya, a manager at ZB Bank , said in Harare yesterday. Jessica Mahatchi, a secretary with a cellphone retailer in the city, yesterday said she had been queueing for cash for more than 24 hours.

On September 26, the Reserve Bank of Zimbabwe raised the cash withdrawal limit 20-fold to Z$20000 to help consumers pay for goods that have lea pt in price. But the central bank is failing to print money fast enough to keep up with soaring inflation. The Harare Tribune newspaper quoted Cato Senior Fellow Steve Hanke as saying inflation was now at 530-billion percent.

Last Tuesday, the central bank suspended the real-time gross settlement system, which allows for electronic payments to be cleared immediately. Companies will be forced to settle payments by cheques, which take up to a week to clear.

Zimbabwe’s central bank governor, Gideon Gono, said he had “no option” other than to suspend the electronic payment system because it was being abused by illegal foreign currency dealers and businesses. The move might help to ease the cash shortage, Gono said yesterday .

“It was a necessary move to restore sanity to the banking sector,” Gono said. The move “should ease the situation because it will prevent unscrupulous members of the public from using overpricing and extractive pricing structures to remove cash from the system, leaving desperate consumers to watch their money disappear in despair.”