Zimbabwe Banks Blame Cash Shortage on Laundering, State Paydays

  • Banks seek to limit withdrawals as they run short of notes
  • State will start issuing dollar-equivalent notes in October

Lenders in Zimbabwe and the central bank have blamed a shortage of cash notes in the country on money laundering, gold smuggling and a decision by the government to spread salary payments to civil servants over the month.

Banks in the southern African country will have to limit the amount of cash they supply to customers to cope with the continuing crisis, Barclays Zimbabwe Ltd. Managing Director George Guvamatanga said Tuesday at a conference in Harare, the capital. “I think weekly withdrawals of $500 will be adequate.”

Steward Bank Chief Executive Officer Lance Mambondiani said banks needed to make charges on withdrawals “more punitive.”

Zimbabwe, with no currency of its own, uses mainly dollars, with the euro and South African rand among banknotes that are also legal tender. The central bank will introduce $200 million of what it calls bond notes in October to counter the cash shortage, printed in Germany and denominated in dollars.

Capital flight, money laundering and rising imports have forced the central bank to double its purchases of dollars, Governor John Mangudya told the conference. “Where we used to import $20 million in notes a month, now we’re importing $40 million,” he said. “One of the biggest crimes is money laundering, but there’s also capital flight, with money going out in wire transfers and carried physically by people crossing borders.”

The government now staggers the payment of civil-servant salaries, which is partly why customers line up at banks more often to make withdrawals, Mangudya said.

“Almost every day is payday, which means there are queues every day,” he said. “In the past three days alone, government has spent $100 million on salaries.”