Zimbabwe Banks Start Issuing US Dollar Chequebooks
The good old days: A Zimbank Cheque for 6 quadrillion Zimbabwe dollars is held up by a customer in December last year before the dollarisation of the Zimbabwe economy. Bankers Association President J.P. Mangudya issued a statement today saying Zimbabwe banks will now start issuing US dollar chequebooks (with strict conditions) to "bona fide customers". The move is almost certain to see an upsurge in bank deposits. By the way, Zimbank, on whose account the above cheque is drawn, are under international sanctions from cosying up to Mugabe and no US citizen or company is allowed to do business with them.
Harare, Zimbabwe, 14 August 2009
Zimbabwe Commercial banks have issued a statement revealing that they will now start issuing chequebooks for US Dollar accounts to their clients.
The US Dollar is now the official currency of Zimbabwe, designated by Zimbabwe's banks as Currency Number 1. The Zimbabwe has essentially been banned in Zimbabwe itself and is now officially relegated to Currency Number 45 by Zimbabwe Commercial banks, meaning that it is no longer legal tender.
Despite this, commuters still get Z$3 trillion in change from a single US dollar as change. Commuter buses also still accept the three trillion as payment and simply pass it on to the next person. It is an astonishing demonstration of trust by the people of Zimbabwe who are not known to trust conductors on public buses at all.
But the lack of change (coins) in either US currency or South African rand have forced this situation.
In their statement today, the Commercial Banks specifically noted, in an underlined sentence, that their clients are not to use the Zimbabwe Dollar chequebooks in their possession but get new US dollar Chequebooks, which will be clearly marked with a USD on the amount box.
The statement also specifies that cheque guarantee limits will apply to the US dollar chequebooks. They will be set at US$200 for individual accounts and US$500 for companies.
The cheques will only be valid in Zimbabwe and will be clearly labelled as such.
Cheque clearance time will be 4 working days for "local cheques" and 7 days for "country cheques" (those outside the cities).
I guess old habits die hard.
The failure by banks to provide chequebooks had resulted in the low deposit base currently bedeviling the banking industry. It meant consumers could not use cheques to purchase goods. As a result, they did not take their money into the bank at all, but kept it under pillows for easy access in case they needed to go shopping or were confronted with an emergency.
Zimbabwe's banks currently hold only US$600 million amongst them. Economists also estimate that there is only US$2 million in circulation in the whole country.
This move by the banks and reassuring noises by the Inclusive Government will perhaps restore confidence in the banking sector and see them rise to new heights as more people put money in their accounts because they can now purchase using chequebooks.
On this one thing, the Inclusive Government has its head screwed on right.