Almost non-cash Zimbabwe checks mobile money limits

Imagine a world without money.

Or do not think about it. Just go to Zimbabwe.

Here, grocery store cash registers are still yawning when payment processed as if by instinct, but where there should be cash, there are only empty plastic slots ATMs break the city as relics of another era, their gray screens blink a stream of apologies: Out of order. No services available. We apologize for the inconvenience. Signs at gas stations, maternity homes and even informal bars in the backyard are begging customers to pay for EcoCash, a form of digital currency. Data-reactid = "13"> Here the cash registers of the grocery store are still yawning while processing the payment, as if by instinct, but where there should be cash, there are only empty plastic slots. ATMs break the city as relics of another era, their gray screens flashing with a flood of apologies: Out of order. No services available. We apologize for the inconvenience. Signs at gas stations, maternity homes and even informal backyard bars beg clients to pay EcoCash, a form of digital currency.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Recommended: The opposition leader Zimbabwe calls for "stealing from people" "data-reactid =" 14 ">Recommended: The opposition leader Zimbabwe calls for "stealing from people"

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Zimbabwe is not completely out of money, but it's close. Ninety-six percent of financial transactions are made here electronic payments, Exchanges the size of buying one tomato and the same as buying a car, basically completed using mobile money, a form of currency stored and exchanged through a cell phone. & nbsp; "data-reactid =" 15 "> Zimbabwe does not fully have money, but it's close. Ninety-six percent of the financial transactions here are now made electronic payments, Exchanges the size of buying one tomato and the same as buying a car, basically completed using mobile money, a form of currency stored and exchanged through a cell phone.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Mobile money today is a global phenomenon, with & nbsp;168 million active accounts worldwideBut its epicenter and the history of origin, undoubtedly, African & NBSP.Hundred million from mobile phone users here. Also the most successful mobile money company in the world and the pioneer in the industry, Kenya M-Pesa, which today & nbsp;used by more than half the population of the countryAnd mobile money in Africa was also revolutionary for another reason – it brought tens of millions of people who never had bank accounts in official financial institutions for the first time. " Data-reactid = "16"> Today mobile money is a global phenomenon, with 168 million active accounts worldwideBut its epicenter and the history of origin is undeniably Africa. Hundred million from mobile phone users here. Also the most successful mobile money company in the world and the pioneer of the industry, Kenya M-Pesa, which today used by more than half the population of the countryAnd mobile money in Africa was also revolutionary for another reason – it brought tens of millions of people who never had bank accounts in official financial institutions for the first time.

But at the heart of this digital monetary revolution is a kind of secret trust – that the money put on the cell phone can again depart from it, that the numbers on the screen can, if necessary, turn into old-fashioned stacks of bills.

And on this front, Zimbabwe is raising a new and urgent set of questions about the boundaries of the mobile money revolution. What happens when the mobile money is the main money? Can digital money services, which themselves are considered the ultimate alternative to cash, really survive in a place where there is virtually no money?

***

At 11:30 on the last Monday evening, Master Murombedzi hid the pillow under one arm, a blanket under the other, and passed through the ink darkness in the center of Harare to his bank.

His goal was to get a good seat in the queue so that he could withdraw cash in the amount of $ 20 – the maximum daily limit – from his account when the bank opened at 8 am the next morning. If he is lucky, he will get it in bonded bonds, such as monopoly money, which can only be used in Zimbabwe, although supposedly equal in value in US dollars. If he were not lucky, the clerk would give him $ 20 in heavy bonded coins. And if the young guard really was not lucky, after 10 or more hours of the queue, he got nothing.

But when he spread the blanket on the cracked sidewalk and lay down to wait for a strong winter night, he pushed the thought out of his head.

"It's cheaper to live for money," he said. Mobile money is "too expensive."

This seems odd, considering that mobile money, presumably, just cash in a digital wallet. But in Zimbabwe this is not so simple.

Since 2009, the country did not have its own currency, but instead uses a mixture of US dollars and South African rand, among others. Today, the dollar dominates.

Officially, every dollar here has an equal value – whether it's the US dollar, a bond bond based on the Zimbabwean reserve, or a digital dollar stored in a purse with mobile money. But in practice this is almost not so. As dependence on Zimbabwe on EcoCash grows, the fees of mobile agents can charge customers. And the actual dollar bills – the only internationally recognized version of the currency in circulation – bring a steep premium.

In the neighboring clothing market, Mavis Magaramombe, like most traders, keeps in mind three prices for each of the pairs of shoes that she has arrayed in neat rows on the towel in front of her. The cheapest price in US dollars, although she does not remember how the last time someone paid it. Slightly more expensive the price in bonds is also rare. And the most expensive price – about 30-40 percent more than the price in dollars – is reserved for people who pay in EcoCash.

"I have to add this extra charge, because it's the same as the money traders will charge me when I need to turn into dollars," she says.

To get $ 100 in US dollars on the black market, which Ms. Magarambe needs to buy her goods across the border in Mozambique, she will need about $ 170 in EcoCash or $ 135 in bonds.

"As the economy worsens, rates are also deteriorating," says one trader in the black market, who asked not to be identified because of the illegality of his work. "The more shortage of cash in our banks, the more I can charge a fee."

Even EcoCash, the main provider of mobile money here, openly admits that its product is not valued in the same way as dollars. "If you go somewhere, there is a three-level price," writes Eddie Chibi, CEO of Cassava Fintech Zimbabwe, a subsidiary of EcoNet, which works for EcoCash, via e-mail to Monitor.

These drifting exchange rates show, in particular, how little confidence Zimbabweans have in their financial institutions, says Naome Chakanya, an economist at Zimbabwe's Research Institute of Labor and Economic Development, a think tank in Harare.

And it is not difficult to understand why.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In the late 1990s and early 2000s, After that, President Robert Mugabe proceeded to forcibly confiscate the flourishing white commercial farms, Zimbabwe's economy was clogged up.To keep up with its bills, his government began printing money.In the end of 2008, rampant inflation meant that stores changed their prices several times in day, and a box of milk, bought for several trillion dollars. "In November of the same year & nbsp;inflation reached 79.6 billion percent, and soon after that Zimbabwe changed its bad currency to US dollars, British pounds and South African rand. " data-reactid = "36"> In the late 1990s and early 2000s, after then-President Robert Mugabe began to operate, the forced confiscation of prosperous white commercial farms, the economy of Zimbabwe is crammed. To keep up with his bills, his government began printing money. By the end of 2008, runaway inflation meant that stores changed their prices several times a day, and milk cartons retail sales for several trillion dollars. In November of the same year, inflation reached 79.6 billion percent, and shortly thereafter Zimbabwe changed its bad currency for US dollars, British pounds and South African rand.

But for most Zimbabweans it was too late. Their savings were destroyed.

"Thus, despite the fact that after this our currency has become stable, people have completely lost faith in their financial institutions," Chakanya said. "Now, many people believe that if you put money somewhere, there is no guarantee that you will ever get them."

What little money they saved, they began to accumulate at home. Less and less remained in circulation. Meanwhile, the broken government spent much more imported goods than it earned in exports, taking its currency reserves.

By 2016, the deficit of dollars – then the main currency used – was so bad that the government decided to start printing now shameful bonded bonds.

"This caused panic in the market," says Ishter Chigumara, a development consultant who wrote his Ph.D. thesis on Zimbabwe's land reform program and its implications. Soon people also collected bonds, fearing what would happen if they gave it to the bank – and so they also began to disappear.

All this meant a lively business for EcoCash, once a small mobile monetary hand of the main cellular operator in Zimbabwe. According to 2017 Global Findex, from 2014 to 2017, the number of Zimbabweans with access to "formal financial services" increased from 33 to 55 percent. And most of this growth occurred in the mobile money sector.

«EcoCash [has] was the hero of the whole scheme of things, "says Mr. Chibi, who runs EcoCash. Without this, he said, most Zimbabweans simply do not have another way to buy or sell things.

But many of them say that EcoCash pushed them out, although the costs are only partially fulfilled by the company. Most EcoCash agents who cash out mobile money now charge a hard fee for their services, much higher than the fact that EcoCash is the official tariff. They say what they need – after all, they have to buy bills that they sell to customers on the black market.

Many Zimbabweans believe that they simply do not have a way out of the cycle. "While the government continues to consume more than it receives, and while we continue to underproduce, we will continue to have this cash crisis," says Tinash Kaduvo, economist of Econometer Global Capital. "And while we have a cash crisis, we will always use these mobile money."

But many suggest that mobile money will continue to lose value, which, in turn, can lead to higher prices in an already poor country.

Returning to the bank's queue, he is approaching 10am, and Mr. Murombedzi, whose eyes are dark from his poor night of sleep on the sidewalk, is near the front of the line. At this time the woman walks past him.

When it passes, a purple bond with $ 5 bonds flutters from her pocket and falls to the pavement in front of him. He scoops it up and holds it for a few seconds in the palm of his hand, staring at it.

Then he turns towards the woman.

"Hey," he shouts to her, "you dropped it."

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