World Bank Provides Guidance to Zimbabwe on Its Ongoing Cash Shortage

The African nation of Zimbabwe has been in the depths of a cash shortage with crippling effects: Zimbabwean banks have been forced to limit the amount of cash they give to their customers; foreign currencies (particularly the United States dollar) have become more widely accepted than domestic currency; and money laundering and capital flight have skyrocketed.

The African nation of Zimbabwe has been in the depths of a cash shortage with crippling effects: Zimbabwean banks have been forced to limit the amount of cash they give to their customers; foreign currencies (particularly the United States dollar) have become more widely accepted than domestic currency; and money laundering and capital flight have skyrocketed.

The government turned to the World Bank for help and guidance to find ways out of this unusual situation. The World Bank prescribed a rapid results approach (RRA) as the most expedient method of curing this problem. It employs a series of 100-day goals to push forward change and development capacity at a brisk pace.

The World Bank successfully deployed the RRA to help large organizations and multi-sector partnerships in the past, and it believes it could be just the right approach for the struggling African nation.

Taking this advice to heart, Zimbabwe recently completed phase two of its RRA program. The second phase focused on improving the country’s ease-of-doing-business climate. The result has been a number of successfully completed milestones that the nation had never previously achieved.

Speaking at a recent workshop on the RRA in Zimbabwe, World Bank Country Manager for Zimbabwe Camille Nuamah said that while the results are positive, there is still more to do. She recommended a transition to the use of e-commerce and electronic currency as one means of achieving the nation’s goals.

She said, “One of the outcomes of [the rapid results approach] is the broad linkage between the private sector and the government, and across the government between agencies. As you go forward you can take this beyond the doing business, you can take this, for example, what is the big challenge of today? The big challenge the country is facing today is the cash shortage and an issue with moving gradually towards electronic payments.”

She went on to suggest that the solution was a private-public collaboration to improve the nation’s access to electronic transactions.

To counter the loss of cash, the nation had already introduced limits on cash withdrawals from banks (to make money laundering more difficult), and plans to introduce a $200 million bond in an effort to stimulate exports. The World Bank, however, feels these measures do not go far enough.

“There’s nothing stopping the government from taking this kind of collaborative exercise through to the banking sector, to the utilities, to the retailers to understand how to build and move quickly and doing business on linking electronic payments. This is something we’re hopeful, that you can take this kind of energy and attack other problems – especially which are really current in our society today.”