Mobile money eases cash squeeze in Zimbabwe

Six months after Zimbabwe’s financial services sector was paralysed by a severe shortage of cash, the aggressive introduction of mobile and electronic money platforms is delivering immediate results.

By Brezhnev Malaba

Although there are still long queues of people desperate to withdraw money from banks, there is a marked increase in the use of mobile money and plastic cards for payment in shops.

Finance Minister Patrick Chinamasa says the financial sector now holds $6.1 billion in deposits owing to an upturn in the use of mobile payment platforms and “plastic” money in the form of credit and debit cards.

Although the formal financial system still controls less money than the informal sector, which circulates more than $7bn, the formal sector has registered immense improvement from $4bn at the beginning of this year.

The country is grappling with a multi-faceted economic crisis characterised by 95 percent formal unemployment, a trade deficit, de-industrialisation, unsustainable foreign debt, and declining revenues.

Chinamasa says Zimbabwe’s reliance on US dollars has made it near-impossible for the authorities to control money supply in the $14bn gross domestic product economy.

The government’s big task is to continue encouraging companies to promote the use of plastic money by installing point-of-sale machines which facilitate transactions.

“I am pleased with that (cash shortage) crisis because it has given us an opportunity to come up with solutions to that problem. We need, of course, to secure the point-of-sale machines,” Chinamasa added.

The government says it now forces the 40 biggest companies to channel their daily cash takings to the formal banking system.

Officials accuse many of these firms of previously refusing to bank their daily proceeds.

The new measures are easing the cash crunch.

Norman Mataruke, a director at the Reserve Bank of Zimbabwe, says the growth of mobile money payments has brought convenience and financial inclusion.

“The mobile money industry has provided the possibility of outreach, vastly beyond traditional banking networks and at significantly lower costs due to the mobile phone characteristics of ubiquity, convenience, speed, security and lower cost,” he said.

Zimbabweans are discovering that mobile money has the added advantage of enabling low-income earners to access financial services that were previously beyond reach.

Modest loans can finance a small business, pay school fees or cover a medical bill.

“This has facilitated provision of affordable financial products to low-income households and micro-enterprises that do not have easy access to finance,” Mataruke said.

The US dollar’s international reserve currency status makes it attractive, but this creates a headache for the Zimbabwean authorities who complain that the money is illegally siphoned out of the country in huge amounts.

“That is what I think we need to understand. Because of its appreciation, everybody is looking for US dollars. They (companies and traders) find ways to come and mop up, siphon and fish out our US dollars,” Chinamasa says.

Economists say the growth of financial technology in Zimbabwe is lowering the cost of transacting.

George Manyere, whose company launched a new mobile payment platform last week, says innovative technology is the answer to banks that are ripping off clients through inflated transaction fees.

“The only way you can get over that (bank charges) is through technology. We want to digitalise money charges and transactions. We need to make it convenient and easier. We do not need cash circulating in the country,” he said.

The number of mobile money subscribers has shot up from 6.7 million to 7.3 million. Economists say an estimated 25 percent of the adult population is financially excluded. – Africa Ind

Related Posts
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, July 1, 2016.     REUTERS/Staff/Remote
LONDON - The post-Brexit recovery across European markets sputtered to a halt on Monday with major equity indices lower and safe-haven demand for precious metals helping the price of silver ...
READ MORE
Zimbabwe’s liquidity crisis: the curse of China’s slowdown and a strong dollar
Zimbabwe’s economy has lost momentum since 2012. The period 2009-12 was marked by an economic rebound following the introduction of the multiple currency system (or dollarization), with the annual ...
READ MORE
Global stocks, euro rise as Deutsche Bank shares rebound
NEW YORK - Stock prices across major markets stabilized on Friday, while the euro recovered as Deutsche Bank's shares clawed up from record lows on a report it is close to ...
READ MORE
Rand hits five-month high against dollar
JOHANNESBURG (Reuters) - South Africa's rand extended its gains against dollar on Friday to hit a five-month high after a court ruled that a 2009 decision to drop 783 corruption ...
READ MORE
IMF calls for Greece debt relief as Germany talks tough
A secret International Monetary Fund study showed Greece needs far more debt relief than European governments have been willing to contemplate so far, as Germany heaped pressure on Athens on ...
READ MORE
Rethinking the power of deflation
The IMF estimates that the US dollar is about 50 percent overvalued in Zimbabwe and this coupled with the fact that the country uses the same currency as the US, ...
READ MORE
Mobile money can drive economic growth – Moody’s
HARARE,– Zimbabwe is among several sub-Saharan countries that stand to benefit from the growth of mobile phone banking which has potential to boost economies and create opportunities for banks, global ...
READ MORE
China selloff sparks gloomy 2016 start for stocks
NEW YORK — Global equity markets fell on Monday while gold and bonds rose after a 7% slide in Chinese shares, sparked by weak economic data, rekindled worries over global ...
READ MORE
Zimbabwe equities end week on a low note as emerging markets quiver
HARARE – Selected heavyweight counters weighed on the industrial index, which closed the week lower at 134.85 after dropping 0.62 (or 0,46 percent). Meikles led the losers, shedding $0,0087 to close ...
READ MORE
RBZ pushes for cashless economy
The Reserve Bank of Zimbabwe is confident of increasing plastic money usage to 80 percent from the current 20 percent in the next five years as the fiscal authorities push ...
READ MORE
European, UK shares snap winning streak, silver surges
Zimbabwe’s liquidity crisis: the curse of China’s slowdown
Global stocks, euro rise as Deutsche Bank shares
Rand hits five-month high against dollar
IMF calls for Greece debt relief as Germany
Rethinking the power of deflation
Mobile money can drive economic growth – Moody’s
China selloff sparks gloomy 2016 start for stocks
Zimbabwe equities end week on a low note
RBZ pushes for cashless economy

Arts & Entertainment