Zimbabwe Bank Suspends Use of Visa Cards as Cash Crunch Worsens

CBZ Holdings Ltd., Zimbabwe’s largest bank, suspended the use of Visa Inc. cards for local transactions as the country struggles to cope with a cash shortage.

Charges on making transactions are very expensive for customers, CBZ Chief Executive Officer Never Nyemudzo said by phone from Harare, the capital, on Friday. Money also has to be settled outside the country for accounts that are held overseas in foreign currency, he said.

The measures take effect Jan. 15 although customers will be able to make transactions abroad, with daily limits of $250 at ATMs, $1,000 for point-of-sale business and $500 for payments over the internet, the lender said in a statement. Visa didn’t immediately respond to e-mailed requests for comment.

Most local banks have limited daily cash withdrawals to $50 due to a shortage of foreign currencies that has led to delays in salary payments to civil servants, the military and some private company employees. The introduction of bond notes in a bid to ease the cash crunch was last year met with protests. Zimbabwe abandoned its own currency in 2009 because of hyperinflation.

Zimbabwe, led by President Robert Mugabe since independence from the U.K. in 1980, is battling food shortages, a 95 percent unemployment rate and the collapse of basic services. Mugabe, 92, has been accused of stealing elections, waging a crackdown against opponents and ruining the economy through the seizure of white-owned commercial farms for redistribution to black subsistence farmers, slashing export income from tobacco and other crops.

SOURCE:BLOOMBERG