Officials involved in the printing of money said the regime was fearful that the presses could be shut down altogether if further political pressure causes the withdrawal of software licences used to design and print the notes.Paper money was already in desperately short supply because the state-run Fidelity Printers & Refiners in Harare was unable to keep up with the demand created by hyperinflation and rapid devaluation that had caused notes to lose almost their entire value within weeks of being issued.But the problems became acute after the Bavarian firm that supplied the watermarked banknote paper – Giesecke & Devrient, which printed worthless cash for the Weimar Republic in the 1920s and supplied Rhodesia’s white minority regime with currency – cut off deliveries last month, under pressure from the German government.
Zimbabwe was looking to Malaysia as an alternative source of paper but the government feared that the licence for the specialist software supplied by another European firm would be withdrawn as part of the boycott of Robert Mugabe’s regime.
The software is supplied by Jura JSP, a Hungarian-Austrian company that specialises in security printing. A knowledgeable source inside Fidelity Printers said the software issue had created an air of panic.”It’s a major problem. They are very concerned that the licence will be withdrawn or not renewed. They are trying to find ways around it, looking at the software, but it’s very technical. They are in a panic because without the software they can’t print anything,” he said.
On Monday, the central bank issued a $100bn note, the highest denomination to date but worth only about 7p, printed on what remains of stocks of the German-supplied paper.The source said the firm had been told that new supplies of currency paper were coming from Malaysia but it was unable to meet the current demand for cash created by hyperinflation that economists estimated was running at about 40m%.
Fidelity’s presses, which had been running 24 hours a day for many months, were rarely started up. The firm also had problems maintaining the presses because it was unable to obtain spare parts.
The cash shortage was contributing to the rapidly deepening economic crisis and further threatening the stability of Mugabe’s regime. The government needs a fresh injection of cash in the coming days to pay its workers, from teachers and nurses, to the police. But most importantly, it needs to ensure that money reaches the army.
Zimbabweans were limited to withdrawing just $100bn a day from their bank accounts, enough to buy less than half a loaf of bread, although the government had just increased the allowance to $1.5tn a day for members of the military. The cash was delivered to the barracks by the banks to save soldiers standing in line for hours like everyone else.
Today, Zimbabwe’s trades union confederation wrote to the central bank governor, Gideon Gono, asking him to remove the daily limit on cash withdrawals, describing it as a “joke”.”As you may be aware, transport alone, costs around Z$150bn, on average. How then do the monetary authorities expect an ordinary employee to report for duty and go back home when he/she is allowed to only withdraw a maximum amount of Z$100bn?” the unions said.”This employee is also expected to make available to his family, bus fare for his/her school going children, funds for daily expenditure. It has also come to our attention that most employees are now spending their productive time queuing for cash at the banks.”
The demand for new higher denomination notes, as the value of existing ones plummeted, was reflected in the rapid increase in the numbers of noughts on money printed over the past two years.In August 2006, the central bank issued a $5 note. A $500,000 note followed a year later.On 2 May 2008, a $500m banknote hit the streets but was swiftly near worthless, and $5bn, $25bn and $50bn notes followed just a fortnight later.The speed of the devaluation can also been seen in the watermarks. Hold a $750,000 note up to the light and the watermark shows the paper was intended to be used for a $1,000 bill. The $25bn note has a $500 watermark.A spokeswoman for Jura, Renate Kroboth, said the company officials responsible for dealing with the software contract were on holiday and not immediately available for comment.
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