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Dr John Mangudya

Business Reporter—

The Reserve Bank of Zimbabwe has increased the bond notes withdrawal limit to $100 per day from $50 and to $300 per week with immediate effect, ahead of increased demand for cash over the festive season.This comes as the bank said it had, to date, released bond notes valued at $29 million, as part of the 5 percent export incentive scheme with tobacco farmers having now received their full allocation.

A cumulative total of $6,2 million bond notes had been deposited by the banking public at banks as at December 16, 2016.

RBZ Governor Dr John Mangudya said that the increase in the withdrawal limit comes after the central bank took note of the challenges banks are facing due to the low withdrawal limits on bond notes.

“We trust that these measures will go a long way towards making it easy for the public to transact during the festive season,” the central bank chief said in a statement released yesterday.

Zimbabwe is facing acute shortage of cash, as it uses a basket of currencies dominated by the US dollar, which is in short supply due to low exports, low foreign investment and a huge annual import bill.

In response to the crippling liquidity crisis, the central bank came up with an export incentive scheme to encourage growth of exports. The export incentive scheme is being monetised through the bond notes, which are backed by a $200 million facility from Afreximbank. Each bond note ranks at par, 1 to 1, with the green-back.

The bond notes are legal tender only in Zimbabwe, which will go a long way in curbing the negative impact of US dollar currency outflows either through importation of trinkets or smuggling activities.

Dr Mangudya said in line with the gradual and measured approach to disburse bond notes into the market on a drip-feed basis, bond notes valued at $12 million had been released by December 16.

The RBZ said it is encouraged by the smooth circulation in the economy of bond notes, primarily introduced to finance the export incentive scheme of up to 5 percent payable to exporters of goods and services and to receivers of remittances from the Diaspora.

The bank said that all tobacco growers who sold their tobacco this year through the auction floors, including contracted tobacco growers, had now benefited from the export incentive scheme.

“This move is expected to provide impetus to tobacco farmers to continue with both reaping and processing of this year’s tobacco crop.”

The RBZ said bond notes would fortuitously and subserviently go a long way to mitigate cash shortages within the economy. But it said clearing of cash queues at banks can never be an overnight event.

Dr Mangudya said the bank was encouraged by the manner in which the banking public continues to embrace the use of plastic money.

“We would like to urge financial institutions and other service providers to ensure that point of sale and other electronic payment facilities are spread throughout the country,” the governor said.