Will lower fees bring cash out from under mattresses?

When the governor of the Reserve Bank of Zimbabwe (RBZ), John Mushayavanhu, presented the first quarter monetary policy statement on February 27, he raised a concern that has puzzled policymakers for decades.

“The issue of people keeping money in deposit boxes or under beds worries us,” he said.

Cash hoarding outside the banking system remains a threat to Zimbabwe’s economic development. It deprives banks of deposits, limiting their capacity to extend loans for productive investment.

The RBZ has introduced a reduction in bank charges. The reforms include a 2% cap on withdrawal fees, a 1,5% cap on point-of-sale (POS) charges, and the complete removal of balance inquiry and cash deposit fees. These measures directly target structural barriers to financial inclusion by reducing the cost of banking.

To understand Zimbabwe’s cash-hoarding culture, one must examine the cost structure that existed before these reforms. Banking clients paid fees for basic services such as balance inquiries, withdrawal charges of 3% to 4%, and monthly account maintenance fees. For small-scale traders and low income earners, these costs were prohibitive. The rational response was to withdraw cash and remain liquid outside the banking system.

Quantifying the extent of cash hoarding is difficult, but its impact is evident. Despite macroeconomic improvements — including inflation dropping to 3,8%, reserves rising to US$1,2 billion, and relative stability of ZiG, many Zimbabweans remain reluctant to return to formal banking.

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The informal sector still accounts for over 70% of economic activity, according to the Zimbabwe National Statistics Agency.

The 2026 MPS introduced substantial and multi-layered reforms. These reforms directly address the most frequently cited barriers to financial participation. Eliminating balance inquiry fees removes a persistent irritation for low-income users. Scrapping monthly fees for small accounts protects vulnerable savers. Lower withdrawal and POS charges reduce the cost of accessing and using one’s own money.

The central question is whether these fee reductions will materially alter the cost-benefit calculation of holding cash. The answer is yes, but with important qualifications.

For small depositors and micro-enterprises, the reforms directly reduce participation costs. Lower withdrawal fees, zero-cost micro-transactions, and the elimination of account maintenance charges create meaningful incentives to re-enter the formal system. However, fees alone cannot fully resolve the problem.

As governor Mushayavanhu noted: “Confidence cannot be legislated, but it can be driven by stable inflation and a stable currency.”

Zimbabwe’s cash hoarding behaviour is deeply rooted in historical experiences of currency instability and loss of savings. Reversing this behaviour requires sustained macro-economic credibility, not just lower transaction costs.

The RBZ has also increased mobile money and Zipit transaction limits to ZiG13 000 per transaction (up from ZiG8 000), with a monthly cap of ZiG50 000. This digital push is strategically sound. Evidence from other African markets shows that when digital payments become cheaper and more convenient, adoption rises sharply. Kenya’s M-Pesa, Nigeria’s fintech expansion, and Rwanda’s digital payment growth all followed similar cost reductions and usability improvements.

Zimbabwe’s digital ecosystem is also strengthening. Money supply growth has fallen to 2,7% from highs of 40%. Inflation is at a three-decade low of 3,8%. Foreign reserves have increased and electronic transactions now account for over 40% of usage.

These conditions create a favourable environment for digital financial inclusion. Currency stability reduces the risk of holding electronic balances, while stronger reserves enhance confidence in the system. Despite the RBZ’s efforts, a key contradiction remains.

The Ministry of Finance continues to impose the 2% Intermediated Money Transfer Tax (IMTT) on foreign currency electronic transactions.

As Gloria Ndoro-Mkombachoto observes: “Every percentage point of IMTT added to a digital payment silently discourages the very behavioural change policymakers hope to nurture.”

For small traders, operating on thin margins, this tax significantly undermines incentives to adopt digital transactions.

True financial inclusion requires coordinated policy action. When monetary authorities reduce costs while fiscal authorities impose additional taxes, the net effect weakens the push toward formalisation. So, will lower fees bring cash out from under mattresses?

The evidence suggests gradual but positive progress. For price-sensitive users, reduced fees directly address key barriers to participation. Combined with low inflation, exchange rate stability, and rising reserves, the current environment is more supportive than at any time in recent years.

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Chigombe is an economist and writes in his personal capacity. These weekly New Horizon articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society (ZES) and past president of the Chartered Governance and Governance Institute in Zimbabwe. — kadenge.zes@gmail.com/ cell: +263 772 382 852.

However, behavioural change takes time. Decades of monetary instability have entrenched caution and distrust.

Additional supportive measures include:

l Introduction of new ZiG banknotes, with improved durability and security features;

l Expanded digital transaction limits; and

l A policy rate of 35%, signalling commitment to inflation control.

Together, these form a coherent strategy. The RBZ is addressing structural barriers while maintaining macroeconomic stability — both essential for rebuilding trust.

Conclusion

The 2026 MPS marks an important milestone in Zimbabwe’s financial inclusion journey. The RBZ’s success in negotiating lower banking fees demonstrates the value of constructive engagement between regulators and the financial sector. The banking industry deserves recognition for supporting these reforms. However, reduced fees alone are not enough.

Chigombe is an economist and writes in his personal capacity. These weekly New Horizon articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society (ZES) and past president of the Chartered Governance and Governance Institute in Zimbabwe. — kadenge.zes@gmail.com/ cell: +263 772 382 852.