Zimbabwe, once called “Jewel of Africa”, is experiencing another monetary experiment. There is one consequence: Zimbabwe and Zimbabwe money/payment agents are running out of dollar cash and dollar reserves.
Zimbabwe has so far imported dollar bills from South African banks. Unfortunately due to something called de-risking, all South African banks have either terminated access to dollar cash or have given notice that they will no longer be supplying Zimbabwean based banks and businesses with dollar cash. Such process is called de-risking.
According to William Manimanzi, the Deputy director of financial markets at the RBZ the problem could be a result of the fact that Zimbabwe is not officially a dollar economy:
“I think you are all aware that we are not officially dollarised. When I say officially dollarised, I mean we don’t have an agreement with the United States that we were going to adopt their currency officially; we just unofficially dollarised. What that means is it’s very difficult to bring cash (USD) in this economy. Where do we get our cash (USD) from? Ordinarily, we import from South Africa and most of the banks due to what is called risking issues, have now given us notice that they can no longer provide our own local banks with cash. So we are in a Catch 22 situation. The only bank remaining was FNB and they gave notice in December that they will no longer supply our own local banks with cash.”
Is there any solution?
Of course, yes: Mass adoption of cryptos.
Next stop of some crypto projects: Zimbabwe
Picture: Zimbabwe once had a lot of cash