Zimbabwe now processes almost all of its payments and transactions electronically, according to information that was shared recently by the country’s Minister of Finance and Economic Development, Patrick Chinamasa.
According to a news report, the Minister gave this update while addressing the country’s legislators in the National Assembly.
He was responding to questions on the cash shortages in Zimbabwe. Chinamasa also said that Zimbabwe has overtaken Kenya in terms of the number of payments and transactions that are transacted electronically, through bank transfer and through mobile money services.
From as far back as 2016 Zimbabwe has been experiencing a severe cash crisis that has resulted in long queues outside every bank in the country. This has also forced people in the country to embrace alternative channels for handling payments, transferring value and clearing transactions.
Mobile money services power Zimbabwean payments
The most popular channel for moving money and making payments has been mobile money services. According to Zimbabwe’s central bank in 2017 mobile money services accounted for 74.52% of all transaction volumes in the country.
These mobile payments and transaction services have already been integrated with other formal financial services infrastructure such as Point of Sale (POS) hardware throughout the country. Even the country’s dominant informal sector relies heavily on mobile money services which are easy to register for most of the country’s largely unbanked population.
POS transactions have the second highest volume after mobile money services, as Zimbabweans have increasingly resorted to card services to handle payments.
Cash transaction and ATM transactions are some of the least used methods of moving money.
As a matter of fact, ATM services have been largely non-existent, which explains the huge interest in the country’s only Bitcoin ATM which was setup by Golix recently. It is the only functional ATM in the country that dispenses US dollars.
A fractured financial system and a forced cashless society
These shifts in the way money moves in Zimbabwe follow a pattern of changes that the country’s financial system has experienced in the past decade.
In 2008, the country had the highest level of inflation in modern history and the government eventually dropped the country’s currency, opting for a multi-currency system that had the US dollar as the base currency for financial services.
This calmed inflation and normalised most payments services. However with Zimbabwe’s import based economy it resulted in a foreign currency shortage that was unsuccessfully plugged with a pseudo currency called the bond note.
All alternatives to cash and formal banking services have been successful so far, creating a cashless society of sorts.