The Bank of Zambia (BOZ) says it is aware of reports of cash shortages and has instituted a thorough analysis and investigation at some of the banks and areas where there is a higher demand for cash in order to ascertain where the huge demand for cash is coming from.
In response to an inquiry, BOZ Deputy Governor-Operations Dr. Francis Chipimo said there has been a big increase in demand for cash from the financial sector since the beginning of the year, which increased further in August.
Speaking at the Monetary Policy Committee Announcement and Press Briefing, Dr. Chipimo said the central bank has been providing banks with more cash in order to deal with the issue and has always emphasized on the fact that banks need to manage cash better.
He said the Bank of Zambia does not impose limits on what banks can give to their clients but always tries to understand why large withdrawals of cash are made when the central bank has been trying to promote the use of all other means of digital financial services, transfers and mobile money.
He stated that the Bank of Zambia had received complaints that some banks have run out of cash.
In further response to the ZBT question, BOZ Governor Christopher Mvunga noted that the country is now going through the crop-purchasing season and some farmers are in areas where banking facilities are not available therefore, as cash is dispatched to farmers for purchases it takes longer to come back into the banking system.
Mvunga said the bank has not limited note circulation or implemented any limits and does not intend to do so adding that the temporal situation is being addressed and is confident that the issue would be sorted out by Friday.
On the question of why only lower denomination notes were available which has resulted in inefficiencies and higher ATM fees for customers?, BOZ Assistant Director in the Banking and Currency Department Raphael Phiri said the central bank has consistently tried to ensure that there is a balanced denominational mix within the economy.
He noted that there is no shortage of K50 or restrictive K100 bank notes but the bank tries to ensure that there is a denominational mixed balance in the economy.
He said the central bank works with all the banks to ensure that sometimes they are able to use the market itself to move money from banks sitting with excess balances to other banks as opposed to going to the central bank.
Phiri mentioned that the central bank supplies most banks with money on a daily basis in order to be able to meet the demand in the economy.