Depositors have no right to demand forex: Guvamatanga

Depositors have no right to demand forex: Guvamatanga
guvamatanga

Barclays Bank of Zimbabwe (Barclays) chief executive officer, George Guvamatanga

NON-EXPORTING depositors have no right to demand foreign currency from local banks because they are not generating any, Barclays Bank of Zimbabwe (Barclays) chief executive officer, George Guvamatanga, has said.
Zimbabwe adopted a hard currency regime in 2009 to escape a hyperinflationary crisis. The United States dollar has dominated transactions, although currencies from South Africa, Botswana, England, China and a number of other countries are also legal tender.
But since last year, the country has battled acute foreign currency shortages largely caused by the huge trade deficits over the years and the creation of money through the real time gross settlement (RTGS) system by the central bank.
Money created through the RTGS platform has not been backed by foreign currency, triggering a shortage of greenbacks which resulted in depositors failing to withdraw their money from banks.
To counteract this problem, the Reserve Bank of Zimbabwe introduced bond notes in November, but these have done little to mitigate the cash crisis.
The Barclays boss joins other bank executives who have suggested that since most Zimbabwean depositors are not exporting to earn foreign exchange, they should not demand US dollar cash from banks.
“Let’s face something here; you cannot have something that you have not created. We have to understand that when you want the US dollars, you need to have exported.
“Farmers and small scale miners should get all their money in cash because they have exported. A civil servant cannot go to the bank and demand all their money in cash because he has exported nothing,” Guvamatanga said during a recent digital money conference.
Central bank governor, John Mangudya, has spoken against cash-thirsty depositors, urging them to “eat what they kill”.
He has also noted that civil servants were getting paid using RTGS but wanted US dollar notes when their incomes were not backed by real money.
“The country is in this situation because people who do not generate cash feel entitled to cash and refuse to embrace plastic money. But it makes little sense for someone not producing to want cash,” Mangudya said.
The gap between cash in circulation and virtual balances is anticipated to widen on the back of bond notes externalisation, according to local equities firm, IH Securities (IH).
While Mangudya affirmed in his mid-term Monetary Policy Statement that the amount of currency in circulation was enough to support the $1,6 billion held by banks from RTGS transfers, IH said this balance could not be maintained for much longer.
In the wake of an acute cash shortage, Zimbabwe – with cash holdings of only two percent of liquid assets held by local banks – is running on money created through the RGGS, which is not backed by actual cash.
As a result of this system, transfers are being made without the actual back of hard currency.
This has seen the central bank pushing for the market to embrace cash-lite transactions so that transactions are conducted virtually.
While this has raised concern in the market that the gap between actual cash and RTGS money is becoming unsustainable, Zimbabwean depositors continue queuing for cash withdrawals, with some sleeping outside banks to get cash.
Guvamatanga said as long as one did not have an export business, they did not deserve to receive cash from the bank.
“If I’m working here and I get my money credited to my account, I cannot go to the bank and demand all of it in cash. We have to understand that for us to have that cash, someone should have exported,” the Barclays boss said.
Just last year, Finance and Economic Development Minister Patrick Chinamasa blamed “cash-hungry” depositors for the country’s cash crisis.
“We are using US dollars to buy matohwe and expect not to run into trouble. It does not even make sense,” the Treasury chief said then.
When Zimbabwe adopted the multi-currency system in 2009, total deposits in the banking system were $1,66 billion, but the cash to deposit ratio plummeted from 35 percent in 2009 to five percent by January 2017.
Banks held $57 million in foreign notes and $7 million worth of bond notes at the end of June, according to central bank data. Physical cash holdings averaged $300 million per month between 2013 and 2014, RBZ figures show.
Hard cash circulation has also slumped 53 percent to $304 million, from $642 million in 2013. In spite of this, bank deposits have increased from $4,728 billion in 2013 to $6,2 billion in 2016.
newsdesk@fingaz.co.zw

Facebook

  • Dobbs one-four

    Civil servants never demanded US$ from the banks. Give us the bond notes. Being foolishly pegged 1to 1 with USD does not make our bond notes forex

  • JAMES GUNIKE

    And huge amounts of cash are being allocated to the so-called Cross Border Traders by none other than the RBZ itself for the purposes of importing silly things like human hair(weave), huge quantities of earphones, skin bleaching cosmetics and jolly juices. Why? Surely why should anyone not in the business of exporting demand foreign currency

  • Liver Deliver

    Guvamatanga , you are getting it wrong my friend. Depositors are just demanding their money that they have deposited.. What is the sincerity of rbz and the banks to give Bond notes when one has deposited USD. Zimbabwe is a net importer relaying on South Africa for all commodities including basics like match sticks , the economy has been informalised meaning that demand for forex is high since everyone is desperate for it to import. Stop being arrogant Guvamatanga, You should be asking what happened to usd$15 billion which should have stabilised our economy. RBZ and Banks are stealing peoples monies and replacing with signed bond notes all out of greediness. Why are banks subscribing to Govt treasury issues when the govt is not honouring on maturity. The govt is the problem because it is broke and stealing from the poor citizens by issuing excess treasury bills which are never redeemed. Guvatanga is uncomfortable because this time around banks are in a fix since usd cannot be scrapped just like that as you did with zim dollar. Phantom money never worked and it will simply not work even in Zimbabwe. Good Lucky on you and Mangudya’s fictious monetary lunacy.

  • kwv

    It always amazes me how easy it is to fool the Zimbabwe population. After the total rejection of the prettily printed pieces of paper produced by Cde Gideon and switching to actual, real money such as US dollars, Pula, Rand or whatever, lo and behold our government prints more pretty paper, this time in Agricultural Green and tells the people this is just the same as real money. These bond notes (or bond goats?) they say are exactly the same as a greenback US $..

    So then, why bother at all? If the money is there why not just use the genuine article? We are told
    this fake money is “backed” by a loan – so why not not just borrow the money and distribute it?

    The sad truth my friends is this new fake money is exactly as valueless as the last lot. And well you may ask, “So, where has all the real money gone?” That money from the few remaining exports, tourism and maybe even aid? But then if you have to ask that question, you are not a real Zimbo

  • toaw

    Get away mhani! Do you think exporters can export without the civil service. You think this country can survive without it. You have been feeding off civil service depositors for so long that fart is coming out of your mouth. You disgust me. Shame on you for not respecting some of the most hard working people in the country.

  • Bornwero

    These guys are disgusting. Now they are saying we cant demand US dollars. That is bollocks. We deposit US dollars and when we want our money you have the audacity to tell us we cant demand it back. You said bond notes have equal value to US dollars so what the hell are you now saying.

  • Idiot

    BTW, what is Barclays Zimbabwe exporting these days?

  • Brian Ellse

    And this is why Zimbabwe is stuffed. Idiots like this. Maybe this clown can explain how a USD (United States Dollar) account balance is not USD? And how the bond note, glorious piece of paper with a stated value of 1USD is not actually 1USD. And this runs a bank? Wow!

  • Brian Ellse

    I would rather hear this idiot explain how his bank protected its cients USD balances that existed prior to bond notes, from RBZ raids and replacement with worthless TB’s? That is story no bank wants to tell us. Not one!

  • Dave

    Not sure why I am amazed with this article! What I am hearing is that if you are a brick manufacturer and you use locally sourced raw material, but you are not entitled to forex to import your machinery to make bricks as you do not export…………WOW
    I am glad that I do not bank with Barclays!

  • Tips

    I am incensed as to why Barclays Bank PLC keep this idiot on the job. With such arrogant as bank CEOs its no wonder the whole country is messed up. This guy is just nauseating.

  • Wilson Magaya

    It hurts but you are right in a wrong way. I would further state that the most popular currency today is the bond coin, I am taken back to a time we all laughed when honorable Chinotimba asked why not just produce bond coins in response to what the people want. I would even go further to say that RBZ should not be bold enough to recapture the regulation and flow of USD cash even though it’s an official currency.

    The technology of money is sadly not the CASH itself but the record that is generated by a transaction and the processes used to verify and authenticate such a transaction as valid. RBZ needs to play its role and maintain a transparent record or all transactions. In this way we can contain the fear that grips many of losing the little they have accumulated. The UNITED STATES DOLLAR is proof of that value and promised and stands by its word to pay the bearer, whilst on the other hand one is not sure of the other forms on offer and managed by RBZ.

    People demand the dollar because they don’t trust bankers and the RBZ period. Continue to engage them and build a consensus of what the future of money should look like in our beloved Zimbabwe. Its within all of us to build the trust and its more so on our LEADERSHIP across the board to be ethical stewards of our collective future, So YES on one hand you are right but on the other you cannot remain on the high horse and state that one should eat what they sow, WHAT HAVE YOU SOWN? Its time we ask the many questions as well WHAT INDEED have the banks and financial institutions sown that makes them deserve to reap. We need to relook the models and realise that BANKING is heavily dependant on the PEOPLE.

    “Nyika Vanhu, Musha Matare” BANKERS SHOULD SOW BY Investing in Innovation and Entrepreneurship. We can start by matching local Innovators with National Challenges that way we industrialise and grow the pie and I will raise a glass to YOU Mr. Guvamatanga….

  • zvorwadza

    This madness by these so-called bankers should stop. The bond notes are only there as an incentive for exporters not everyone

  • BHUNUNDIZVO

    Guvamatanga u have joined them!!! shame!

  • PC

    Zimbabwe has been threatened to be cut off from the Swift system, because their RTGS is not backed with foreign currency. Zimbabwe is now using ZIMSWITCH, which is a domino system bound to crush, like the Zimdollar.

  • Sawubonafish

    I hope there is a filthy, cold jail cell waiting for crooks like Guvamatanga in a new political dispensation. He welcomed the bond notes fraud, he encouraged it, why? So that he could make nice fantastic profits trading US dollars on the black market, using depositors’ funds. When the same depositors turn up at his bank, demanding their cash, lawfully and rightfully, he tells them he does not have the cash, they have no right to demand it because “they did not earn it”, when he has surreptitiously given the cash to his runners in the black market to reap people off and give him the profit. He is pissing on the very depositors he is defrauding, telling them it’s raining……..and laughing all the way to the bank, pun fully intended.

  • Farai

    Guvamatanga you are not serous. Our bank balances are reflected in USD and are meant to be backed up by the respective banks. How then can you turn around and say don’t expect money for using banks? This to me says #never#use#Barclays#Bank as they have no money!

  • Lloyd

    The mattress bank beckons if you are a Barclays account holder so that the bank underperforms and he gets chucked out. I think it’s time we remind business the age old saying that “customer is king”.

Connect With Us

Fingaz Polls

Should all Commuter Omnibuss be moved to designated areas?