Plastic Money, Queues & Change In Perspective

Zimbabwe has been hit by a cash crisis which has seen the lengthening of bank queues around the nation. Bank limits constantly dropped and most banks hit a low of $50 on their withdrawal limits. The Reserve Bank encouraged members of the public to use plastic money in their transactions to help keep business in the country alive. This saw many business operators, who previously did not have swiping facilities, obtain them. Charges on transactions involving swiping facilities were reduced to under 1.25% across all banks. The Central bank also introduced bond notes into the economy in a bid to ease the cash crisis and subsequently shorten the bank queues. The Reserve bank introduced $1 bond coins and $2 notes into circulation, amounting to a total of $17 million according to the Reserve bank Governor. Withdrawal limits were placed on the bond notes with people limited to $50 a day and $150 a week. Questions were then raised by concerned parties concerning how the notes would ease the crisis given that they were being limited. Some economists assumed that the notes were being limited because the central bank wanted to avoid flooding the market with the notes which were at risk of being inflated and subsequently becoming valueless like the original Zimbabwean dollar.

After all these measures were introduced by the Reserve Bank, the queues around the country haven’t receded. Citizens, including pensioners, continues to queue for long hours to access cash from the banks. Some people have resorted to sleeping in these queues in order to ensure they are among the early birds when the cash is released. With the widespread use of swiping facilities and mobile money platforms such as Ecocash, it raises the question at to why the queues are still as long as they have always been. Many Zimbabweans prefer to have their cash in hand and use it as they will rather than use mobile money platforms and swiping facilities. This may boil down to several factors, some of which will be looked into her

1. Informal Markets : The Zimbabwean economy relies heavily on the informal sector. Most of the things that the ordinary Zimbabwean needs are found in the informal sector of the economy. This sector’s transactions are mainly done in cash, with the occasional mobile money transaction. Swiping facilities are unavailable and this in turn forces people to seek cash so they can purchase goods and services.
2. Unawareness : The majority of people in Zimbabwe are not fully educated on how swiping facilities work and their advantages. Even after the Reserve bank began encouraging citizens to make use of swiping facilities, there was little done to show the people how doing that would be beneficial. Given the country has relied so heavily on cash for a very long time, education on swipe services may be needed.
3. Role of banks : Zimbabwean banks need to figure out a way to get more machines into the markets. They also need to find ways to have more people open bank accounts which allow them to make use of plastic money. The more people who make use of plastic money, the more popular it’ll become and hence make purchasing of goods and services easier for everyone.

There are many other measures that could be put in place to push people towards the use of plastic money. The Central bank should pursue some of these solutions and relieve the queues that have become a permanent feature outside banks.