HomeLocal NewsInflation eroding digital money values — Report

Inflation eroding digital money values — Report

BY TATIRA ZWINOIRA

THE World Bank has, in partnership with the government, launched the Zimbabwe Digital Economy Diagnostic Report, a review highlighting the current strengths and weaknesses of the country’s digital economy.

The launch is part of the World Bank’s Digital Economy for Africa (DE4A) country diagnostics initiative which provides a snapshot of the state of the digital economy in a given country under the five pillars of the DE4A initiative, namely infrastructure, public platforms, financial services, businesses and digital skills.

“This will allow Zimbabwe to benchmark itself with other countries that have completed the assessment as well,” World Bank country manager Rosemary Mukami Kariuki said at the virtual launch on Thursday.

“The report dovetails well with the government’s thrust with modernising and digitising the economy as reflected in the NDS-1 (National Development Strategy-1) 2021 to 2025 and so we hope the early findings and recommendations from the analysis conducted with the government teams in 2019 and early 2020 fed into the design of the digital economy pillar of the NDS1.

“With today’s launch of the report and discussion of this recommendation, we hope to enable stakeholders to contribute further with the hope to rationalise the digital economy pillar of the NDS-1.”

According to the preliminary findings of the report, based on the five pillars, Zimbabwe was found to be more advanced in its digital financial services followed by digital infrastructure, digital skills, digital platforms and digital entrepreneurship.

Under the digital financial services pillar, Zimbabwe was found to conduct 96% of all transactions via digital means and that government used digital money almost exclusively.

It also found that high-value electronic platforms run by the central bank have been key in facilitating corporate payments and that there was a high number of mobile money wallets in the country.

However, it noted that the government needed to improve on the interoperability among money operators, usage of internet banking in rural areas, foreign currency to support Visa and MasterCard and on inflation which is eroding digital money values.

With regards to digital infrastructure, the report noted how Potraz (Postal and Telecommunication Regulatory Authority of Zimbabwe) voice and data tariffs distorted the market. Thus, a coordinated and strategic approach was suggested in dealing with broadband, regulatory reforms and developing rural data coverage to improve this pillar.

In terms of digital platforms, the report noted that while the government had significantly improved transferring its services to electronic platforms, ageing equipment, lack of interoperability, reduced capacity, and slow uptake of digital services remained a challenge.

The report proposed adopting an interoperability framework, strengthening coordination, consolidating digital services, and investing in institutional and human ICT capacity.

Regarding digital skills and entrepreneurship, the main challenges found were limited financial support to support entrepreneurs, poor infrastructure to better train students, lack of coordination between the government and private sector.

Thus, it was suggested in the report that the government should make clear policy changes to support entrepreneurship and encourage ICT learning for students, increase investment in these two groups and work with the private sector.

World Bank senior public sector specialist Jana Kunicová, who led the team responsible for the report, said there was a need to address the declining macro-economic and poor policy framework in Zimbabwe.

“We need to think about the set of the interlocking crises that are facing Zimbabwe and the world so the macro-economic instability that has beset the nation for the past two decades, but also and quite obviously mentioned by Mukami and Chief Secretary (Office of the President and Cabinet chief secretary, Misheck Sibanda), the Covid-19 pandemic which has affected our lives so that overarching context is what underpins the assessment,” she said.

“Secondly, there is understanding that the key issue going forward will be both the short-term price of management (the balance between financial risk and revenue) as well as the long-term structural reforms.

“So, balancing the short and long-term views will be crucial to overcome these challenges. And finally, the third, is an understanding that the ICT sector is at the core of the digital economy and will be central in turning around the Zimbabwean economy.”

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