For the better part of the last two decades, Zimbabwe has probably been setting and breaking records on anything and everything to do with the economy or money in general. Most of these records are nothing to be proud of and the majority of international news articles about our monetary and economic woes would frankly be hilarious if they were not accompanied by images of forlorn and dejected-looking citizens.
However in the last year or so our financial system has been getting the rare praise here and there. Reporters, analysts and others (from both within and outside the country) are praising the emergence of our “cashless economy”. In most of these pieces, the rise in the number of electronic transactions is presented as a silver lining to a far darker cloud whose significance they prefer to downplay—specifically the unrelenting economic crisis that in a roundabout manner made the use of electronic money necessary.
So in the face of all this, the question that some may have asked themselves is this: Does the present situation in the country qualify us to be called a cashless society? The short answer is that Zimbabwe is only technically a cashless society. For the much longer answer which rejects this notion, let us explore the situations in other countries which are striving to free themselves of physical currency and then compare them to ours.
Other countries are forced to protect cash users while we desperately need to do the opposite
Most small businesses in the country either outrightly reject electronic payment or add premiums as high as 45% above the corresponding prices in cash. This is a problem because these kinds of traders are the majority in the country. It also means that anyone who gets paid through the bank—which happens to be almost everyone who is formally employed—gets their salary eroded by these premiums. Even worse, elderly pensioners who are less likely to be able to understand electronic payments, also get paid through banks and they are forced to compete with their still-working counterparts for the scarce physical currency which is demanded by an ever unrepentant informal sector.
While the government insists that electronic money (the fancy term for the numbers in your bank account) and physical cash in the form of bond notes are one and the same, the informal market disagrees, with physical currency considered and treated as being worth more than its electronic counterpart. This is the same informal sector within which most of the country’s commercial transactions take place. Obviously, in such a scenario it is very inconvenient for employers to admit that the e-money that they pay workers has almost half the buying power of hard cash. Evidently there is a real need to protect all the people who have to resort to card and mobile phone payments.
Now compare our country’s situation with that which exists in other countries. A law passed in the US state of Massachusetts as far back as 1978 prohibits retailers from discriminating against “a cash buyer by requiring the use of credit”. In recent years as more businesses there are abandoning cash, other states like San Francisco, Philadelphia and New Jersey were forced to ban cashless stores which were sprouting up in increasing numbers.
Unlike in the US, here the so-called unbanked far outnumber those who have bank accounts and the latter are severely and literally paying for it.
In other countries EFT companies are promoting adoption, their Zimbabwean counterparts are aloof
It is no secret that credit card companies love the concept of a cashless society and they should—it means more money for them. In 2017 Visa offered 50 restaurants, cafes and food trucks 10 000USD each if they completely eliminated cash payments. VISA and other similar financial services companies have also been known to fund fintech startups which contribute towards the fulfilment of the vision of a cashless future. These companies are so enthusiastic and relentless in their pursuit for a cashless future that the governments of the countries they operate in have to intervene on behalf of vulnerable groups who do not have access to these systems.
The situation in Zimbabwe is different as most promotional efforts by our service providers appear to serve the purpose of merely sparring with or fending off competitors. Our mobile money service providers have shown an unwillingness to deal with the issues that affect those who cannot access physical cash—especially considering that the same market actors who drive up the disparities between the values of physical and electronic money are heavy users of their platforms and should easily stand out to any competent data scientist who wants to flash them out.
Our physical and electronic money are now two different currencies
As prices go up, so does the demand for physical cash and most of it never makes it back into the banking system. The black hole that is the informal sector never allows out any (physical) money that gets into it. This has created a situation in which physical notes circulate between the informal traders and the growing industry of the similarly informal (but far more illegal) foreign currency dealers. As physical currency gets scarcer and scarcer it has become commoditised to the extent of becoming a currency in its own right that is separate from the electronic (or RTGS) one. Even on the foreign currency parallel market the two are considered separate currencies.
So while we have come to accept the fact that when it comes to anything to do with monetary systems, Zimbabwe is something of an oddity, describing the current situation in the country as anything close to a cashless society is a stretch that over relies on the dictionary definition of the term in order to be true. Cash is still the preferred method of transacting in many cases and communities.