Transacting is crazy expensive in Zimbabwe. In his communique on measure to ‘stabilise’ the financial sector during the COVID 19 pandemic the RBZ governor talked about the cost of transactions needing to stay the same or go down:
The Bank also agreed with the banking sector to suspend increases in charges related to the provision of all electronic payments during these trying times.
Similarly, the Bank is also engaging the mobile network providers to ensure that their mobile banking charges are reduced in order to promote electronic banking which is in line with social distancing.
Take the pole out of your eyes first
The biggest contributor to the high cost of transacting is the 2% tax on electronic transactions introduced in October 2018. The government should show good faith by suspending this tax first if they really want to show they want to ‘promote social distancing through electronic transactions.’
Besides the objective of promoting electronic transactions, the governemnt has an obligation to assist the whole economy at these trying times. Businesses are going to shrink, jobs are going to be lost, a lot of companies that will close due to COVID 19 will not be able to open again.
Other governments are giving tax exemptions to citizens, issuing bail out cheques, sending out cheques to households etc. The Zimbabwe government cannot afford this we know but they can reduce the burden of the 2% tax, maybe just cut it in half. Everyone who runs a small business knows how crippling this tax is. Every little relief helps in this uncertain situation.
Why the gvt won’t want to do this
The most understandable reason why the 2% tax is not even a discussion right now is that the government is anticipating the horror style aftermath (even during) of COVID 19: decreased exports, closed businesses, no tourism etc. In anticipation of this they want to keep all the revenue they can squeeze out of us so the 2% tax becomes holy grail, can’t be touched.
At least adjust it
If they can’t adjust it to 1% then perhaps they should bring back the reprieve that was there when they first introduced the tax. When we complained about the tax, Mthuli Ncube quickly exempted all transactions of or below USD10.00. He said in an interview with Bloomberg this protected the poor.
Well right now the exempt anount is ZWL100.00 which is just above USD2.00 or if you are using Mangudya’s new exchange rate, just above USD4.00. Why won’t Mthuli Ncube protect the poor again and make transactions of USD10.00 and below exempt again? Heck even USD20.00
They should stop talking about how transaction fees should drop when they are still taking so much steak out of my money whenever I buy food to feed my family in this Coronavirus rid world.