Payment nightmares hit poor Zimbabweans hard

“Every month I lose not less than a third of my salary to high prices and extra payments to get cash – which I can not do without. This system is not working at all as we are now worse off,” complained Timothy Bvumira (28) a schoolteacher in the capital, Harare.

Bvumira was in a queue with dozens of other “cash hunters” in a retail outlet that offers a cash-back facility upon making purchases.

“Sometimes I am forced to purchase things that I don’t really need just to get some cash through cash-back facilities offered by some retailers like this, I have no choice,” said Yevai Chishaka, a 35-year old mother of two, to whom – like other Zimbabweans – the struggle to earn money is only the first leg of the battle, the second being the struggle to access it.

For those with large sums of money in their bank accounts (like from sale of assets) and would want to have the money in safer US dollars, this is an undertaking that requires careful planning, almost similar to that of a military operation.

However, for most ordinary citizens concerned with their day-to-day lives, life has become a real nightmare since the monetary authorities resorted to promoting a cash-less society as a way of beating the severe liquidity crisis.

In a country where the majority eke a living below the poverty datum line in the midst of hopeless unemployment, every cent should count, but it is no longer the case as the little money Zimbabweans struggle to earn is easily lost through extra charges for cash and the inflated prices by retailers, which are meant to discourage electronic payments.

Since the crisis started in the first quarter of 2016, prices have been consistently increasing. Cash (US dollars) prices are lower, followed by bond note prices and then those for mobile money and bank transfer which are the highest.

The severe shortage of cash and unavailability of cross-net transactions for mobile money in a country where a majority do not have bank accounts have effectively conspired to corner citizens into a situation that leaves them with the option of either queuing for hours to get the little cash that they can access from the banks or losing huge chunks of their money to the cash barons.

Most Zimbabweans, who are still smarting from the experiences of the 2008 financial crisis that left many with nothing, do not trust banks, so in the absence of cash, most informal transactions are done through mobile money platforms. These services are largely available through a network of agents that operate on a take-it-or-leave-it basis.

Unlike in other economies where consumers have the alternative of reverting back to cash, in Zimbabwe, the dire cash situation does not allow that. On the black market where the cash is available, it comes at a cost of between 30 and 50 percent, depending on whether the cash is in the form of the local surrogate currency, called bond notes or the United States dollars proper. This means if one wants to get $100 in bond notes, they have to cash-out anything up to $130 from their mobile wallet and if they want the $100 in greenbacks, they have to cash-out up to $150. Although mobile network operators (MNOs) discourage the practice, it has become the norm, as there is no other option available to those desperate for cash. If the $100 that has been cashed-out from one mobile wallet is to be cashed-in to another wallet so that it can be sent on a network where the intended recipient can access it, the same black-market rates apply meaning citizens are losing throughout the round-about transaction process. The same also applies for bank transfers.

The situation on the mobile money sub-sector is not made better by the absence of interoperability between the services provided by the country’s three MNOs. Econet Wireless, which offers EcoCash mobile money service, is reluctant to let go of the lucrative rewards that come with its 98% stranglehold on the local mobile money market. EcoCash competes with NetOne’s OneMoney and Telecel Zimbabwe’s TeleCash, the two sharing the remaining 2%.

Rueben Gwatidzo of Information Society Initiatives (ISIT), an information society consumer rights organisation, blames the current state of affairs in the mobile financial services on the RBZ, the Postal and the Telecommunications Regulatory Authority (Potraz), the regulators responsible for the sector, that he says are not protecting citizens from abuse.

“Consumer welfare should be the winner in any healthy competition, but this is not the case,” Gwatidzo said.

“If there is competition and that competition does not deliver consumer welfare, then it is not a competition at all. The quality of service that we are looking for is that which should improve the lives of the consumer.”

Potraz director-general, Gift Machengete, says efforts are currently underway to ensure interoperability between Zimbabwe’s mobile money service providers.

“The interoperability of mobile financial services platforms is a process. Consultations with the three mobile operators, the Reserve Bank of Zimbabwe, the Competition and Tariff Commission and Potraz were done and the mobile network operators were directed to integrate their platforms,” he said.

The RBZ has indicated that it is in no hurry to force players in the mobile money sub-sector to tie up.

Meanwhile, a new market has emerged for the defunct Zimbabwean currency that, during the country’s economic crisis, made world records. The notes, which are now hot collectors’ items, are finding their way to online marketing platforms where dealers are making a fortune from the misfortune of the millions who lost all their savings in Zimbabwe’s hyperinflation.

“I am paying $15 for this (pointing on the picture of Z$100 trillion note on his placard) and when the buyers come I can sell it for $20,” said Farai Mashoko, one of the currency traders on the streets of Harare. The various notes have different prices. “I don’t know what they want them for, but on a good day I can buy five of these notes and that would give me a profit of $25,” Mashoko added. The notes are finding their way to collectors where they are sold for as much $200 for each Z$100 trillion note.

The Zim-dollar was demonetised in 2015, seven years after the country had adopted a multi-currency regime that is anchored on the use of the United States dollar.