Zimbabwe: Banks move towards automating payments system
An announcement by the Reserve Bank of Zimbabwe (RBZ) said 90% of financial institutions operating in the country had made “significant progress” in implementing the Straight Through Processing (STP) project, which is meant to link core banking systems with the RTGS system in order to improve operational efficiency.
STP enables the entire trade process for capital markets and payment transactions to be conducted electronically without the need for re-keying or manual intervention.
Zimbabwean businesses and individuals, grappling with acute cash shortages and transaction limits with banks, have resorted to the RTGS payment system but this has largely proved very inefficient due to constant delays in the system due to tremendous pressure from high usage rates.
RTGS transactions have been taking as long as four days to complete, instead of the normal 24 hours provided for by the RBZ.
The latest move comes against the backdrop of the introduction of a new currency by the RBZ on Wednesday, which has been re-denominated by a factor of 1:10,000,000,000, effectively removing ten zeros from all monetary values.
The RBZ had removed three zeros from the country's currency in August 2006.
The latest move, while likely to bring relief to the transacting public, is unlikely to be the panacea to the country's economic recession, characterised by low productivity levels and acute commodity shortages across the country.
Analysts fear that the new currency, whose highest denomination would be Z$500, would still suffer significant value erosion unless inflation, currently officially estimated at over 2,000,000%, is dealt with.
The country currently has at least 28 types of recently introduced notes of different denominations in circulation, but most have already become obsolete because of inflation. The highest is currently a Z$100bn agro bearer cheque introduced in July. The country has been printing so-called bearer cheques since 2003 because of the fast erosion of the currency has made it untenable to print real money.
These will cease to be legal tender on December 31, 2008 to give way to the re-denominated currency.
About Dumisani Ndlela
Dumisani Ndlela is a Zimbabwean journalist specialising in business and financial reporting, with experience reporting on commodities, stock and financial markets, advertising, marketing and the media. He has previously reported from a number of regional countries as well as from the UK and Germany on commodities and regional integration. He can be contacted on ku.oc.oohay@aleldnd.
