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Continued Cash Shortages In Zimbabwe Seen Further Crippling The Economy

Zimbabwe's cash crisis continued on Monday with shortages of bank notes in Harare, the capital, though the pinch eased somewhat in Bulawayo - the country's second-largest city - and in eastern Mutare and Midlands town Kwekwe.

Sources in Harare said bank customers waited in line at Stanbic and other institutions without securing funds, and long bank queues remained around the city center.

Scant information was forthcoming as to moves by the Reserve Bank of Zimbabwe to relieve the shortages of bank notes which have persisted despite its issuance late last year of new notes in denominations of Z$250,000, Z$500,000 and Z$750,000. Some economists have suggested Z$ 1 million or Z$10 million notes are needed to meet economic requirements given hyperinflation some estimate over 50,000%.

Bank officers and central bank sources said only Reserve Bank Governor Gideon Gono and a handful of RBZ officials are fully informed on the situation.

Correspondent Thomas Chiripasi of VOA's Studio 7 for Zimbabwe told reporter Patience Rusere that central bank sources said money had to be urgently diverted to Kwekwe, which had been without an adequate cash supply for two months.

Prolonged shortages of cash are likely to cause a further drop in household spending, delivering a further blow to an already moribund economy, said Dennis Nikisi, director of the graduate school of management at the University of Zimbabwe.

One of the more troubling aspects of the crisis has been the allegation, launched from a number of directions, that central bank officials have been involved in schemes to divert new notes to the black market or otherwise dealt on the parallel market.

For perspective on the allegations, reporter Ntungamili Nkomo turned to economist Rejoice Ngwenya of Harare, who said that as long as the Reserve Bank is headed by Gideon Gono, whom he described as “a mere banker” with little understanding of economics, corruption within in the monetary authority is likely to continue.

Transparency International said in a recent report that corruption has become part of everyday life for Zimbabweans, with recession seeming a permanent fixture.

In a 2007 overview report on corruption in Southern Africa, the group said individuals and corporate bodies have turned to “criminal activity as part of survival strategies.”

Zimbabwe has launched a ministry and a commission charged fighting corruption, but observers say political will seems lacking to crack down on corruption at high levels.

Transparency International Regional Program Officer Mary-Jane Ncube said that the country's says the country's anti-corruption institutions lack resources, while Harare has not taken aim the biggest criminals, many of whom have official connections.

More reports from VOA's Studio 7 for Zimbabwe...