Tuesday, November 11, 2008

Businesses stop accepting cheques

This is madness - one is allowed to take from the bank only 500,000 a day - a business 1 million. How can one pay in cash - it will mean people will have to queue up all day to get money - then queue to pay bills - bringing business to a standstil!

The Herald - 11 November 2008
Business Reporter
CHEQUE payments have ceased to be legal tender for most businesses, including some state enterprises, as service providers and retailers seek to beat the effects of high inflation. A survey by The Herald Business yesterday revealed that hotels, mobile telecommunications companies, some state-run organisations, manufacturers, retailers among other businesses are now insisting on cash payments or the US dollar equivalent.By default, the move effectively reduces Zimbabwe to a cash-based economy and trashes calls for use of other payment forms such as credit/debit cards, cheques and other electronic payments.The Reserve Bank of Zimbabwe has already suspended the use of electronic payments saying it fuelled speculative foreign currency dealings.In separate interviews, officials from different companies said it had become unviable for them to continue accepting cheques in light of spiraling inflation.The Central Statistical Office last reported the annual inflation rate for July at 231 million percent. Independent economists believe it has risen much faster ever since."We have stopped accepting cheques because of high inflation. The value of a dollar today will not be the same tomorrow," said a manager with a local hotel in apparent reference to the period, which a cheque takes to clear. It clears after four days.Last week, Zesa Holdings announced only cash was required for bill settlements. Subscribers of Econet and NetOne will also have to pay for all services in cash.Fashion retailer, House of Kumali is still accepting cheques although the prices are notoriously exorbitant.However, some observers have noted that companies needed cash to buy foreign currency on the black market."What will they do with the cash?" asked one observer."The money will never find its way to the bank. It will be used to buy foreign currency on the parallel market."This is the whole idea why they are insisting on cash payments."A banker, with a leading commercial bank said such developments will make life harder for individuals and corporates who are not getting enough cash from banks.Individuals are allowed to withdraw a maximum of $500 000 while the corporate limit sits at $1 million."With the small amount that people are allowed to withdraw from banks, cheque payments will create convenience," said the banker. The Reserve Bank of Zimbabwe has raised withdrawal limits nearly 10 times but cash shortages persist.

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