ZIMBABWE’S hard-pressed businesses say they are likely to witness depressed revenues in the short term due to the Reserve Bank of Zimbabwe’s decision to limit Ecocash transactions to ZW$5 000 per day.
Businesses were already struggling with effects of the deadly coronavirus pandemic, coupled with high production costs, high taxes, low disposable incomes and foreign currency shortages, among other things.
The Reserve Bank of Zimbabwe (RBZ), which is struggling to contain Zimbabwe’s burgeoning foreign currency parallel market, this week directed mobile money operators, dominated by EcoCash, to limit daily transactions, cancel agent lines and curtail bulk payments.
Zimbabwe National Chamber of Commerce’s newly-appointed president Tinashe Manzungu said the Central Bank’s decision to continue restricting mobile money transaction limits was negatively affecting the country’s ease of doing business and hurting small businesses and the marginalised.
“Most people in Zimbabwe prefer to use mobile money, which is fast and convenient compared to the traditional banking system,” he said, adding that one of the main reasons for the large unbanked population in Zimbabwe is geographical inaccessibility and poor infrastructure, with many of the unbanked population living in remote rural areas.
“This, combined with a lack of financial education, creates very high barriers to banking for the rural populations and for the farming communities outside towns. Mobile money has afforded the marginalised, the rural and the small-holder farming communities the chance to be integrated into the country’s formal financial system and be able to contribute to the country’s fiscus through various taxes and levies,” he added.
Manzungu also noted that the limits on mobile money transactions could result in either higher demand for Zimbabwe dollar bank notes or near-total dollarisation of the economy as retailers prefer to receive the forex directly, rather than get electronic Zimdollars which have limited use due to the limits.
“Increased demand for Zimdollar cash notes will impact the already existing premium on cash notes, whilst near 100% dollarisation implies an accelerated depreciation of the Zimdollar as it becomes less and less preferable. It’s a move that will force retailers to charge for goods in foreign currency, which will be unfair to most people who are still getting paid in local currency,” he said.
Retailers’ Association of Zimbabwe president Themba Ndebele also weighed in, saying while the latest measures by the RBZ will not effectively collapse business, it will certainly affect operations and cashflows in the short-term.
“There will be disruptions in the market since a lot of people were used to EcoCash and will be forced to migrate to the formal banking system,” he said.
A survey of small to medium enterprises (SMEs) showed that only 14% of — most of them in the informal sector — are banked.
Japhet Moyo, the Zimbabwe Congress of Trade Unions (ZCTU) secretary general, said it was critical for the government to come up with measures to support SMEs at a time several large companies were struggling to remain viable, with some having adopted a cocktail of measures to remain afloat, including retrenchments and sending workers on unpaid leave.
-Zimbabwe Independent