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Mobile money is the most credible solution to Zimbabwean cash crisis

Zimbabwe is facing another cash crisis. That much is pretty obvious to the people standing in queues outside some of the retail banks around the country.

Though not as crippling as the cash shortages that the country has experienced in the past, the current spate has affected scores of bank account holders who have had to experience frustrations related to this.

Despite assurances from different institutions that the situation is manageable, some people have already tagged the situation as the start of something that could spiral out of control and lead people down a very familiar and uncomfortable road.

Zimbabweans generally prefer to deal in cash and when it comes to the security of the formal financial system and questions about the reliability of banks, it doesn’t take much to rattle the entire population.

For more than a 10 years citizens have been subjected to different waves of financial services mayhem.

From banks facing curatorship and then going under, accounts of speculative practices from the champions of indigenous financial institutions to a hyperinflation experience that eroded the value of bank deposits and came tied with its own cash shortages, most Zimbabweans will tell you that they have seen the rough side of formal financial services.

The solutions that have been embraced for the current shortage by those affected are fairly obvious. A report in the Herald outlined some of these measures which have included $500 limits on withdrawals, the disabling of the Zimswitch cross-bank ATM facility and the suspension of the Point of Sale cashback facility from some retailers.

The governor of the Reserve Bank of Zimbabwe, Dr. John Mangudya also encouraged people to use plastic money instead of relying on cash. This came ahead of a directive issued to tobacco farmers to open bank accounts from which they would receive the payments for the sale of their crop.

Where is mobile money in all this?

One measure that isn’t being pursued as aggressively, though, is the mass adoption of mobile money services as a way of working around this potential crisis.

Despite its strong presence across the country where it has outpaced formal banking services, mobile money has only been mentioned as one alternative and not as the leading solution that it is primed to be.

Some likely reasons could be the high costs attached with mobile money transactions as well as the fact that the leading provider of mobile financial services, Econet’s EcoCash, (it holds 74.3% of registered mobile money subscribers) which handles the majority of mobile money transactions (it pushed 96.9% of transactions in the last quarter of 2015) is a private sector operator and not a public sector solution.

However, all this is flying in the face of the reality that mobile money has established a firm place in the Zimbabwe financial services matrix. Our country’s economy has slowly embraced the movement of money through informal trading channels and mobile money has emerged as a convenient tool for carrying these transactions.

In the most recent telecommunications sector quarterly report from the industry regulator POTRAZ, mobile money services registered transactions valued at $533 million dollars in the three months ending December 2015 from an aggregate of 7.3 million mobile money subscribers.

The service’s popularity has been fuelled by a high mobile penetration rate, the ubiquity of mobile money agents (there are over 33,000 mobile money agents across Zimbabwe) limited requirements for signup as opposed to formal banks’ account registration and of course, the significant distrust that the country’s banks have earned.

Mobile money service providers also appreciate the convenience that they can deliver and have been going out of their way to integrate their platforms with as many third-party services as possible in the hopes of mopping up as much transactional revenue as possible.

All this points to how mobile money should be at the centre of this cash crisis workaround or at the very least, how it should be more of a solution than the use of plastic money alternatives which the central bank has been advocating for.

For the sake of progress, until the actual solution for the real problem that is instigating this cash crisis has been identified, it would probably be worth exploring how the use of mobile money can be positioned as a solution.

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14 thoughts on “Mobile money is the most credible solution to Zimbabwean cash crisis

  1. How can one use plastic money when the charges of doing so are not even an OPEN secret. the charges are too exhobitant to use plastic money

  2. There is a simple solution: Zhuwao needs to choose his choice of words carefully. We had him these few last days making every threats against foreign companies, banks included, then cash shortages hits people. It begs the question, where does he keep his cash, under the bed or in a foreign bank?

    But again, this is Zimbabwe where everything goes. We have a minister who is in charge of ICT. He gives or approve a contract to be issued without going to tender. His company starts selling equipment which is needed to built the base stations which was awarded without going to tender.
    And the same guy who was given contract without going to tender buys equipment to build base stations from the minister, nothing happens and its business as usual.

    Cry my beloved country!!

    1. His name is probably in the Panama papers. We simply have to read all those 11 million pages. Tichamubata Chete Zhuwao

  3. I think “Eh What” has a very valid point. Your company (if you are lucky enough to have a formal job) will most likely not post your salary straight to say Ecocash wallet. So before you can Ecocash you have to top it up right and that means cash, no?

    1. @Sinclair well your company can use the Ecocash payroll system to post your salary directly to your Ecocash wallet. I think the problem is that as Zimbabweans we are too backward and we believe seeing cash is always the best way to transact, but if you do think about it as much as people hate on Econet and mobile money and complain about the charges they are actually providing solutions to all these problems. We just need to open our eyes and change mindsets. If you do think about it the only reason why people complain about charges is coz you are charged everytime that you make a transaction but with traditional banks you are charged that so called monthly fee. The solutions and alternatives are there but we as people just resist the change.

  4. What are the current charges for mobile money transactions – anyone? This mode of handling money certainly looks very attractive for the average maZimba given that mobile phone penetration is well over 70% and rising. The charges have to be realistic though.

  5. IF this article maintains that “Zimbabweans generally prefer to deal in cash…” then mobile money is no better a viable solution than plastic money. It’s a HARD sell to popularise exclusive mobile money transactions in the face of such mistrust of banks and the gvt itself in the national psych. The problem is imports (and externalization of cash if you like) since 2013 has been mopping local market dry of the cash generally preferred by Zimbabweans. Since increasing liquidity enough in the economy through export related productivity is not happening anytime soon, one can reasonably predict that it’s only a matter of time before the bank cash crisis badly deepens and even mobile money agents start finding difficulty processing bigger amount cash-outs.

  6. Are the people using mobile money not cashing out as well? It’s just that the amount you can cash out is subject to the agent, hence there is no official reduction in the mobile money cash out limits. Mobile money users are suffering the same as banked customers. Besides, plastic money is more convenient than mobile money. It’s faster to swipe than Ecocash, that’s why most big shops have a dedicated mobile money till that tends to have a longer queue than the rest. This is more of a mobile money propaganda article, than a genuine look at the cash crisis.

  7. i really suspect this latest crisis is related to the threat by our minister to hijack companies that refuse to cede 51 percent of their hard earned shareholding. and people will not be mobile money conscious if government does not lead deliberate efforts to go cashless. it is not true that holding on to cash is a sign of backwardness. it is just a force of habit that older generations have been used to. even in the USA where there is technological advancement everyday, older generations rarely use cashless payment methods. im sure if we were to lay out a carefully laid out plan to go cashless, we could do it in a short time. but this is zimbabwe we are talking about. all we love to do is gloat about our independence, with nothing more to show for it.

  8. I’m sorry but it’s easy cheaper to use cash…. I’m using a coparate account and is 5$ per rtgs transaction ontop of the monthly bank charge… So just passing day 5 bills A month will cost a phenomenal 540 /year…. Just 5 only… Ridiculous

  9. Zimbos dont want cashless transactions because it impedes corruption why cant gvt enable mobile money for traffic fines road tax passports and toll gates…..also public transport …..asi vese havadi coz there is a record of transaction and vakuda kuluma……

  10. Hey fellas .Money doesnt grow on trees.As long as we are not producing and exporting not even mobile money will help ok.

  11. there is a need to partner with banks in zim for mobile money to be implimented succesfully, where 3 people have to go to a bank and wait for long queue ,only one would do that ,the others would do their transactions using mobile money transfers only one at the end goes to bank and that person maybe the wholesaler for example ,in such a way we reduce demand for cash problems in banks

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