Zimbabwe: Digital Money Must Be Cheap, Efficient
The banking sector plans to import another 50 000 point-of-sale machines in the next 100 days and along with NetOne's major campaign to break Econet's near monopoly on mobile money, there should within a few months be adequate capacity to take the cashless economy rural.
There are other changes that are required, mainly on transaction costs and taxes and finalising the seamless integration of all digital money systems, but generally Zimbabwe is close to a cashless economy. The major move into rural areas has been hampered by several factors, the main one being that "going cashless" means that just about everyone has to do this simultaneously.
But one sneering criticism, that rural people are not sophisticated or educated enough to switch to digital money, can be shot down right now. Just about every urban person knows that even old ladies in rural areas with a very basic primary education have no problem punching the codes for a "call me back" text message and all seem to be aware that a young urban relative can charge their phone with airtime. Solar lamps, which also have the slot for a charging cord, are now also almost ubiquitous, so recharging phone batteries is not a major problem.
NetOne has promised, as part of its OneMoney roll-out, to add around 200 more base stations. With both major mobile systems pulling their weight in this regard, each automatically backs up the other, even if that means people need two SIM cards, ensuring that there is adequate redundancy in case of failure. Even better would be a deal where they can back each other up formally without SIM card switching.
The largest remaining problem is the cost of a transaction, especially a small transaction using a card. Here the Ministry of Finance and Economic Planning, the Reserve Bank of Zimbabwe and commercial banks need to look hard at how to get card charges down to at least those now standard in the mobile sector.
This may require a different sort of tax regime and charge chart, but it must be accepted that small transactions should cost no more than a cent or two. The Finance Ministry needs to reflect that a cashless economy makes tax evasion very difficult and banks need to think about what one million cent coins can look like. Volumes can more than make up for lower unit prices.
For most people it is now possible to move money between bank accounts and mobile wallets and most banks are on Zipit as well as ZimSwitch. But there are the odd holdouts and the RBZ needs to make it clear that all banks must allow customers to move between platforms and use the full range of payment methods.
At the moment coins are still needed for things like kombi fares, buying the odd vegetable or, and this is a newspaper company's hassle, buying a newspaper. In theory mobile money could work, but it can take forever to make a 50c transfer. Econet looked at a tap system a while ago, but this was never really rolled out. But some simple way of coin equivalents is needed.
However, since people do not hoard coins, like they hoard banknotes and bond notes, so long as the RBZ and the banking system keep adequate supplies in circulation this is not a serious problem.
There are those who hope that it will be possible to get back to plenty of ATM cash. But there is one problem that will not go away just yet. People hoard cash and even if the amount in circulation was doubled tomorrow there would still be huge shortages. In theory, the $200 million of bond notes issued should be adequate, but far too many of them are piled up under mattresses instead of circulating.
So we might as well go modern and become like Scandinavia, where most shops refuse to take cash. We suspect that within the next decade or two banknotes might well join postage stamps; these are available at post offices, but hardly anyone uses them any more. Almost everyone uses their phone for communication over a variety of platforms and it does not seem unreasonable that they will soon regard digital banking as the only way to go.