Creative way to solve cash crisis in Zimbabwe
Zimbabwe has in the past years endured inconceivable economic pressures, more so after the Zimbabwe Dollar Crushed in 2009.
The crush of the Zimbabwe Dollar resulted in Zimbabwe adopting the use of multi-currencies such as the South African rand,
United States dollar, Botswana pula and other for all transactions in Zimbabwe. The BusinessDay reported early this year that Zimbabwe was experiencing massive shortages of cash and Zim banks are unable to import cash to meet their clients’ demands and properly perform their financial intermediation role.
Financial Technology has the potential to help solve the cash crisis in Zimbabwe by providing alternatives to use physical cash. The following services can be used to keep transactions and liquidity going in Zimbabwe. Mobile money transfer, Credit cards and prepaid vouchers.
Mobile telecoms providers in Africa have come up with different mobile money solution that enables their customers to complete simple financial transactions such as sending money to loved ones, buying prepaid airtime for yourself or other subscribers and paying for goods and services. This platform can reduce the need to use cash in Zimbabwe. There are however, disadvantages related to the use of these platforms e.g. because transactions can only be effective in specific shops, therefore it will still be a challenge in stores that do not accept mobile money. Many agents also close during holidays in almost all provinces and only operate half day on weekends.
The use of plastic money i.e. Visa and MasterCard can be another effective option to solve the cash crisis since one doesn’t have to carry physical cash. Although this platform can only be effective in the urban areas mainly cities and towns where the market is at least 30% of the population. The state is still promising to install more of the points of sale machine even in the rural areas. The disadvantage of using cards could be fraud since card cloning is currently gaining popularity.
Prepaid vouchers are another option that people can use to make their transactions. Tumira (www.tumira.co.za) is running a pilot in Zimbabwe and South Africa and has partnered with certain retail stores in both countries whereby a payment of a product can be made in another country that has sufficient cash e.g. South Africa and collection of the product in another e.g. Zimbabwe. This is another option that one can use to avoid using cash in Zimbabwe. However it has its own disadvantages since business can only be effective between the stores in partnership.
Since Zimbabwe is running out of cash and hasn’t introduced the proposed bond notes yet, the three platforms mentioned above should be able to assist people with sending of goods and avoiding the usage of physical cash. These may not be the only options, but they are tested and credible solutions which enable the buying of goods without the use of physical money.