FINANCE minister Patrick Chinamasa on Wednesday gleefully told parliament, while responding to MPs’ questions on cash shortages, that Zimbabweans have overwhelmingly embraced electronic forms of payment, with 96% of transactions now being conducted electronically.
“As a matter of fact Mr Speaker Sir, because of these challenges, we have overtaken Kenya in terms of the number of transactions that are transacted electronically and through RTGS (real-time gross settlement system) and through mobile,” he said.
“The way to go Mr Speaker Sir, developed country or not developed, is that we are moving towards a cashless society and the challenges we have met because of cash shortages have expedited the movement of our people towards a cashless society to the extent that of the US$97 billion transactions that have been transacted in this country, 96% of them are electronic.”
Chinamasa said there were over 70 000 point of sale machines in the country at the moment, up from 45 000. He said they will be increased to 120 000.
The debate on cash versus electronic payments has been going on for some time with no clear winner. The question remains: Which is a better payment method, cash or electronic? Paper or plastic? A number of valid arguments have been made for both. The answer sometimes depends on who you ask. While there is a widespread realisation across the globe that, in a digital world, every transaction does not have to be cash, there are many factors that come into play. Electronic transactions have their advantages and downsides, just like cash.
The situation sometimes depends on the environment, the demographic structure, that is how big the millennial generation is or how techo-savvy the wider society is, and indeed, how networked it is. There are also other variables like security, flexibility, tangibility, accessibility and debt issues. In many parts of the world, the underlying driver for the reduction in the use of cash or its abolition is technology. As e-commerce transactions continue to grow, there is greater online interconnectivity in terms of financial intermediation.
Overall, the use of cash is declining as electronic methods of payment rise. This is heavily influenced by a millennial generation which has more comfort and dexterity with digital payments than older people. Arguably, cash belongs to a bygone age and, in some ways, it is an inconvenient form of payment.
However, the situation in Zimbabwe is different from other countries where people voluntarily abandon cash payments like in the Scandinavian, Western Europe and North American countries.
The situation in Zimbabwe is informed by a chronic liquidity crisis and cash shortages. That is the big difference. This is affecting people’s lives and how business is conducted. In fact, it has helped cripple the economy. So there is nothing to celebrate when people are forced to migrate to electronic transactions due to inconveniences and suffering because of chronic cash shortages.
That is why instead of bragging about plastic money, Chinamasa must provide solutions, that is paper money to help people, businesses and the economy out of this deep crisis. We still critically and strategically need cash in Zimbabwe.