“Good bankers, like good tea, can only be appreciated when they are in hot water.”
Omen Muza
THREATS typically come with opportunities, although we tend to focus more on the former than the latter. That’s why they say every dark cloud has a silver lining. In Chinese philosophy, they talk about Yin and Yang. Yin represents danger, while Yang represents opportunity. So while the cash shortages have largely been a painful experience, there are unintended consequences which must be welcomed.
Reduction in POS, RTGS and mobile banking charges
In an effort to encourage usage of alternative payment methods such as mobile and plastic money, market players are either reducing or eliminating charges altogether, something they previously found hard to do. For instance, in early June, EcoCash introduced a promotion under which users of the mobile money transfer platform could make payments without charges except for the 0.05c government tax for a period of 90 days. Around the same time, its sister company Steward Bank introduced the Fee Free Friday Promotion under which customers could transact for free at its POS machines every Friday until July 15, 2016. Subsequent to that, on 10 June 2016 the bank announced that it had scrapped charges for all POS transactions below $5 except for the $0.05 government tax every day of the week. On 2 June 2016, Steward Bank had also announced a reduction in its charges for RTGS payments by 50% from $10 to $5. However, in order for these price reductions to make a meaningful impact on transacting habits, they must be implemented widely by the banking sector. In that regard, the reduction in bank charges for electronic transactions announced by the RBZ on June 14 2016 will enhance usage of plastic money.
Wider deployment of POS infrastructure
Limited POS infrastructure has always been one of the key impediments to increased usage of plastic money, but this is changing gradually. In early June, CABS announced that its POS machines were now available at all City of Harare banking halls and users could now pay for rates and water by using their ZimSwitch, VISA or MasterCard enabled cards. The City of Gweru was among the first municipalities to configure its systems to accept card payments. Partly due to moral suasion from the RBZ and partly due to the desire to remain competitive in the face of cash shortages, market players are making arrangements for POS machines to be installed in their businesses. It is estimated that since the calls for the public to move from hard cash to plastic money, retail stores have seen an estimated 50% spike in plastic money usage. The Bankers Association of Zimbabwe is considering engaging the authorities to secure for appropriate incentives on the importation and installation of POS terminals.
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E-channel opportunity for banks
The cash shortages have no doubt provided an opportunity for banks to promote their electronic payment channels such as Point of Sale, Mobile Apps and e-Banking/Internet Banking. Standard Chartered Bank has the “Forget Cash Campaign” also dubbed “Cashless Is Stressless”, Steward Bank has “Let’s go cashless” and hashtag “SwipeandGo”, while CBZ Bank has the EVOLVE! Campaign/ Cashless Crusade as well as hashtag “NoCashNeeded.”
Wider use of mobile money
Econet Wireless sees the current cash shortages as an opportunity to increase usage of its mobile money service and in early June announced that motorists could now buy fuel at 36 service stations belonging to RAM, Engen and PUMA in 11 towns and cities, and pay through EcoCash. The market is, however, underwhelmed by lack of initiative on the part of the other mobile money platforms — TeleCash and OneWallet — in taking advantage of the situation to offer payment solutions.
Deepening financial inclusion
The reduction of charges and wider deployment of POS infrastructure have the effect of making card and mobile transactions more affordable and accessible to those who previously found them too expensive or inaccessible. This is expected to have a positive impact on the financial sector’s financial inclusion goals as envisaged by the National Financial Inclusion Strategy.
Reigniting the currency debate
The declining attractiveness of the US$ and its impact on export competitiveness have forced a rethink on the best option for Zimbabwe in terms of the main transacting currency. There have been suggestions by business for adoption of the rand in order to restore export competitiveness, while government’s preferred position appears to be to diversify demand and usage of the permissible currencies as originally intended when the multi-currency system was adopted in 2009. Either way, the renewed debate on the currency regime provides an opportunity for the authorities to reassess options, affirm their commitment to the current regime or change course.
Wider acceptance of multi currencies
Publicly listed building materials manufacturer Turnall became one of the first businesses to publicly announce that it now accepted all the currencies in the currency basket, ostensibly in an effort to boost demand for its products in a liquidity constrained environment. The likes of Innscor’s Simbisa Brands have since followed suit. On June 10 2016 Treasury — through permanent-secretary Willard Manungo issued a directive to all Government departments, parastatals and line ministries which offer services or sell goods to accept payments in all multi-currencies under the basket of currencies by 30 June 2016. The ministry said the directive also applied to local authorities, meaning that ratepayers could now pay for services through any currency that is in the approved basket.
Test case for RBZ governor
Every leader must at some point prove his/her worth and the currency crisis is Mangudya’s first real opportunity to provide lasting solutions for the benefit of Zimbabwe’s a long-suffering and traumatised transacting public.
Against the background of dangerously low levels of public confidence in the apex bank’s currency management credentials, the Governor’s task is daunting but by no means impossible. After all, as one Jaffar Hussein once said, “Good bankers, like good tea, can only be appreciated when they are in hot water.” Depending on how well he handles it, the cash crisis can be some kind of Waterloo or rites of passage for the good Governor appears to be an honest and straightforward guy and because of that he has garnered a fair amount of public goodwill. However, given the trust deficit created by his swashbuckling predecessor, everybody wants to see not only the colour but the texture of his money.
Omen Muza edits the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact on [email protected]
