As a big proponent of everything technology-related, the idea of a completely cashless world has always titillated me. Unfortunately, technology is not always a good thing, especially when its implementation is shaped by regulations which are not meant to benefit its users but are rather only there for “the greater good”. This is just a fancy way of saying that the benefits of those regulations, if any at all, are only obvious to their creators. Everyone else is left with bewilderment and some extra frustration added to their already difficult daily lives. Such is the case with electronic money in Zimbabwe, which for long has been touted as the solution to the country’s crippling cash shortages which used to see some people waking up before dawn to queue in banks only to collect the equivalent of 4 United States dollars (if they were lucky).
After successfully encouraging more people and businesses to adopt electronic payment systems, out of sheer necessity rather than anything else, the finance ministry and an overreaching central bank are now adding onto the difficulties that users of electronic money are already experiencing due to the economic climate and currency instability. The government has adopted a hostile stance towards the relatively new electronic wallet providers and is now blaming them for what are very familiar inflation patterns (by this I mean that the country has experienced record-breaking inflation levels in the past sans any electronic money systems). That being said, Zimbabwean authorities are being forced by desperation to act out some of the worst-case scenarios that can occur in a cashless society. Most of these are due to the excessive centralised control being exercised by an overzealous central bank.
Authorities can indiscriminately take away people’s access to their own money
This year the RBZ has been accusing mobile wallet providers, Ecocash in particular, of countless misdeeds. These accusations are then frequently used as justification for an increasing number of regulations, some of which significantly affect the transacting public and business operators. One of the most infamous of these episodes was a sudden announcement earlier this year that all mobile money services had been suspended until further notice. This was later reviewed to something more sensible but the fact remains that both the RBZ and the government have (or consider themselves to have) the power to do exactly that and more. This means that users of any electronic payments platform which falls afoul of the authorities risk getting caught up in the fallout of the ensuing punitive measures and losing access to their funds without any notice.
In a completely cashless society, something which many Zimbabweans have already experienced to some degree in the recent past, this all means that the government can arbitrarily shut anyone out of their accounts even if it contains their only money under the sun, any personal emergencies or critical deadlines bedamned.
Accounts can be blocked as a form of punishment
In one of his now all too frequent public notices, the reserve bank governor Dr John Mangudya even made it illegal to share parallel exchange rates on any platform. The punishment for doing this is the suspension of any financial accounts associated with the name of the sharer. Besides the problematic nature of a central bank playing the role of censor, that threat alone speaks volumes on the amount of power which authorities now wield over anyone whose finances are shackled to any local financial or even fintech institution. “Shackled” is indeed the right word since there are currently few, if anyways, in which one can (legally) take their money out of the official banking system regardless of its currency.
The 2% Intermediated Money Transfer tax which the Zimbabwean finance minister Mthuli Ncube introduced to take full advantage of the country’s increased (and desperate) dependence on electronic money is a straightforward example of how a cashless society just brings with it additional and far more efficient forms of taxation. It should be pointed out that this tax is usually added on top of the already significant fees charged by the money transfer platforms.
The imposition of transaction limits
As parts of its efforts to supposedly battle the forex black market, the RBZ has also been recently toying with transaction limits. The most recent of these is the imposition of a ZWL5000 transaction limit per day on mobile money wallets. Using the RBZ’s official exchange rate, this translates to just a little over 60USD which is an insultingly low amount to impose over an entire country.
NB: The RBZ missed the entire point of mobile money
When mobile money systems were first introduced into the country, their main selling point was that they were a convenient financial solution for the unbanked and the underbanked. It then becomes ironic that with the abolishing of mobile money agents, the only way of withdrawing money out of a mobile wallet is through a bank account. Such has been the eagerness by the RBZ to integrate mobile money systems into the rest of the financial sector that they have completely missed the premise upon which they were built in the first place.