Gold may soon be Zim's only legal tender


Gold may soon become the only legal tender in Zimbabwe.

This bizarre scenario does not seem implausible for embattled Zimbabweans. They now have to contend with the fact that major shops and supermarket chains are refusing to accept bank-certified cheques from several established commercial banks amid reports that some may collapse because of liquidity problems.

Because of the shortage of Zimbabwe dollars, many customers have resorted to using bank-certified cheques for commercial transactions. It was also easier to use such cheques because of the huge wads of Zimbabwe dollars required for simple purchases.

With official inflation at 619 percent, Zimbabwe dollars have become worthless and piles of them are needed to buy a simple breakfast of bread, milk and eggs.

Many retailers have put "no cheques accepted" notices in their shops because they fear these might fail to be honoured by affected banks.

The situation has been exacerbated by panic withdrawals of the already scarce Zimbabwe dollars by nervous depositors after the Reserve Bank of Zimbabwe (RBZ) announced that it would no longer help troubled financial institutions.

Shoppers interviewed in Harare on Tuesday said the refusal of businesses to accept cheques could only worsen their plight.

"Bizarre things happen here one after another. Maybe we will soon be unable to buy anything because we won't get cheques accepted and we won't have the Zimbabwe dollars to pay," an irate Malvern Choto said.

Despite the country's high inflationary environment, requiring people to be in possession of wads of notes, banks often restrict the amount of cash a depositor can withdraw.

The RBZ last year introduced so-called bearer cheques to try to ease the shortage, but these have not solved the problem.

The bearer cheques should have been abolished last month, but their use was extended indefinitely because Zimbabwe dollars remain in short supply.

Zimbabwe's once-vibrant financial sector is awash with rumours that many established banks might go under.

The Zimbabwe Independent said most banks that had low liquidity levels had been left exposed and scurrying for financial cover after the new RBZ governor, Gideon Gono, demanded urgent recapitalisation. This was to take into account rising inflation eroding the institutions' shaky capital positions and market risk.

A well-known asset management company, ENG Capital, and its subsidiary, Century Discount House, have since been shut down by the RBZ - and two directors were arrested - after they failed to account for an estimated Z$80-billion (about R6-million) in investors' funds. - Independent Foreign Service


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