Transactions processed through the National Payment System declined 9% in July largely reflective of the illiquid state of the economy particularly on high value transactions. According to the Reserve Bank of Zimbabwe (RBZ) monthly economic review for July, the value of NPS transactions declined to $6.31 billion from $6.94 billion in June.
With increasingly tight fiscal space, Government, the largest stimulator of aggregate demand, has restricted its expenditure to the payment of employee salaries, on much delayed dates, and the servicing of Treasury Bills. The effects of this are filtering through the private sector. Monthly credit to the private sector decreased by 2.3% to $3.48 billion from $3.57 billion in June 2016.
According to the review, the value of RTGS transactions registered a 13% decline to $3.91 billion from $4.52 billion in the previous month. RTGS transaction volumes also fell from 268 192 in June 2016 to 242 373 in July 2016.
Cash transactions decreased 2% to $530.60 million in July 2016, from $543.94 million in June 2016.
Annual broad money supply growth rate increased by 1.71 percentage points to 14.84% in July 2016, from 13.13% in June 2016. Growth in money supply was partly underpinned by tobacco related foreign exchange inflows.
As at 31 July 2016, $558.41 million had been realised from the sale of 190.05 million kilograms of tobacco. On a month-on-month basis, broad money supply declined by 0.05%, to $5.13 billion from $5.14 billion in June 2016.
Annual growth in money supply was on the back of increases in demand and savings deposits which stood at 31.96% and 25.95%, respectively. Partially offsetting these increases were declines of 15.21% and 4.40% in under 30-days and over 30-days deposits, respectively. In proportions, demand deposits constituted 53.8% of total deposits; followed by over 30-days deposits, 19.4%; under 30-days deposits, 14.3%; and savings deposits, 12.5%.
Balances of banks in the nostro accounts stood at $166 million. The RBZ recently announced plans to inject funds into nostro accounts through $215 million facilities from international financiers while a further $330 million is under negotiations with regional financiers. The central bank expects the move to improve the external payments situation and subsequently boost liquidity in the economy.
Mobile and internet based transactions values rose to $709.26 million from $639.19 million as at end June 2016. Card based transactions also registered an increase in the month of July owing to the persistent cash shortages as the value of transactions rose by 21% to $406.35 million from $335.40 million in June 2016.
The value of cheque transactions however recorded a 10% decline $9.20 million from $10.26 million registered in June 2016.
Meanwhile a total of five banking institutions have adopted the agency banking model with a total of 3,774 agents across the country. RBZ said as at 30 June 2016 one banking institution out of the five that adopted the model had the largest agency banking network of 2,901 agents.
“As at 30 June 2016, a total of five banking institutions had adopted the agency banking model with a total of 3,774 agents across the country. One banking institution had the largest agency banking network of 2,901 agents, representing 76.9% of total banking agents in the country,” said RBZ.
The country has also seen increased usage of mobile banking agents, which totaled 34,000 across the country during the same period.
According to RBZ significant growth in mobile banking payments was recorded from the period January to July 2016, with a total of 24.5 million mobile transactions valued at $491 million processed in July 2016 compared to 20 million transactions valued at $389 million in January 2016 representing 23% and 26% increases in value and volume terms.