17 January 2018
   
Family tragedy as 3 infants burn to death
ED takes over Bob's globe-trotting too?
$150m waste: Vic Falls airport shocker
Grace, Bob sanctions review in February
Africa handled Mugabe ouster: Namibia Pres
SA: Student fails; kills Zim teacher
Zim family still at Thailand airport
Mnangagwa off to Zambia Friday
MORE NEWS
SMM saga: Letter to RBZ chairperson
Minister sells post-Bob Zimbabwe in Spain
MORE BUSINESS
Racism: Malema party storms H&M stores
Donel Mangena rocks The Voice UK
MORE SHOWBIZ
Mourinho says 'relaxed' about Sanchez
Bangladesh easily beat Zimbabwe
MORE SPORTS
'Shit-hole': Just Take moral high ground
ZHUWAO BRIEF: ED-iots and election delay
MORE OPINION
 
Trump rage ignores truth: A response
ED govt legitimacy & the church’s role
MORE COLUMNISTS
 
 

A cashless solution for Zimbabwe’s crippling cash-crisis

17/12/2017 00:00:00
by Brian Richardson
 
Zimbabwe’s crippling cash-crisis ... Brian Richardson
 
RELATED STORIES

THOUSANDS of Zimbabweans are celebrating the resignation of Mugabe and renewed hope can be seen everywhere. Unfortunately, the overnight departure of a dictator doesn’t extend to the crippling legacy he leaves behind.

Economic recovery is top of mind but will depend greatly on foreign investments. It will take time for the new successor, Emmerson Mnangagwa, to earn his stripes. Investors have adopted a “wait and see” approach, but time is not a luxury this cash-scarce nation can afford.

Citizens fear that the current economic crisis could again lead to uncontrolled money printing and hyperinflation which could wipe out hard-earned savings for a second time since the nation’s economic collapse in 2008.

A cashless society may be the best long-term strategy for Zimbabwe to realise its enormous economic potential.

Cash – the pervasive dictator

The scarcity of cash continues to infiltrate and dictate every aspect of life in Zimbabwe. Despite being hard to access, cash remains king as markets and traders only deal in cash.

Zimbabwe’s main currency, the U.S. dollar, was adopted to stabilise the economy. To supplement the short supply of greenbacks, bond notes were introduced despite widespread distrust in the value of this quasi-currency.

Printing an oversupply of bond notes could intensify the current cash crisis and generate inflationary pressures. The plummeting value of bond notes and the public’s growing distrust in monetary authorities highlights the country’s desperate need for a long-term solution.

Cash scarcity – a blessing in disguise

Zimbabwe is faced with a unique opportunity to capitalise on its cashless predicament by embracing the possibility of a cashless future and perhaps becoming the first country in Africa to make the transition.

However, financial inclusion must remain top priority as 70% of the adult population are unbanked and only 81 out of every 1,000 adults have accounts with commercial banks. At least 81% of the unbanked in rural areas have problems accessing cash to buy basic requirements.

The underutilised power of mobile

Mobile penetration in Zimbabwe has hit the 95% mark, which means that the infrastructure for electronic payments is set up. EcoCash, Zimbabwe's leading mobile money transfer service, has made substantial inroads but more can be done to encourage the uptake of cashless solutions.



Advertisement

To replace cash, some merchants are using Debit cards and POS devices but the rollout of these cards and devices are expensive. Mobile-to-mobile payments, on the other hand, can be implemented immediately without the rollout of any infrastructure whatsoever.

Banks should earnestly consider partnering with FinTech and mobile banking pioneers such as WIZZIT who champion financial inclusion and who can help banks quickly reach the under-banked and unbanked population through a cost-effective mobile payment infrastructure.

Hundreds of millions of dollars are being stored under mattresses and banks cannot ignore FinTech solutions that cause minimal disruption and that can be implemented and up in running in less than 3 months.

Kick-starting the cashless shift

Running a country with hard cash is expensive. Instead of devising new plans to make cash available, the government should drive the cashless shift by promoting and enforcing electronic payments, which will motivate citizens to open bank accounts.

Government should lead by example and a good starting point is to only distribute disbursements electronically. Government can also force traders who want to stay in business, to accept and promote electronic payments. The same can be enforced for the payment of commodities like water, electricity and fuel.

A cashless society offers new ways to manage economic growth and can bring a swift end to excessive spending, tax evasion and money laundering. Audit trails keep track of every dollar spent and help rebuild the public’s confidence in government and monetary authorities. Going cashless also opens the door for local online shopping to flourish.

The role of banks in reviving the economy

The old saying ‘adapt or die’ particularly applies to banks who have to evolve with changing banking habits and advances in FinTech innovations. A growing global trend is for banks to partner with FinTech and mobile money service providers that can get services to the market much faster, simply by offering safer and cheaper real-time remittances.

In addition to partnerships with FinTech solutions providers, banks can reduce costs and promote a strong savings culture by offering citizens interest on savings in the bank. This much-needed liquidity will enable banks to build balance sheets and increase loans to entrepreneurs, which in turn has an enormous impact on job creation and the revival of the economy.

Brian Richardson is the CEO of WIZZIT International. Contact WIZZIT for more information on getting your bank up to speed with technologies useful to your customers.


 
Email this to a friend Printable Version Discuss This Story
Share this article:

Digg it

Del.icio.us

Reddit

Newsvine

Nowpublic

Stumbleupon

Face Book

Myspace

Fark

 
 
 
comments powered by Disqus
 
RSS NewsTicker