Africa Moyo Business Reporter
Government is working on providing foreign currency for the acquisition of 50 000 new point of sale machines in the next 100 days as part of broadening the use of plastic money. President Emmerson Mnangagwa has set 100-day deliverables for line ministries, as he seeks to inculcate a new work ethic aimed at turning around the economy.
Currently, over 75 percent of retail transactions are being conducted electronically as the nation seeks to circumvent the absence of physical cash in the economy. Deputy Minister for Finance and Economic Planning Terrence Mukupe, has indicated that they intend to increase the number of point of sale machines to about 100 000 to enable wider use of plastic money.
“On the issue of financial inclusion, there is an issue that as Government we have said we should increase the use of plastic money. But if you go to the banks right now, you can’t access swipe machines; there is a huge backlog. I can tell you that as part of our 100-day plan, we are going to have an extra 50 000 machines. What that means is that we will have to provide foreign currency so that there is more machines to enable people to swipe from any part of the country,” said Deputy Minister Mukupe.
In the 2018 National Budget statement, Finance Minister Patrick Chinamasa, said the use of plastic and electronic money has generally been successful. POS machines are owned by banks and their prices range from US$100 to US$300. There has been an 189 percent increase in the number of POS machines deployed across the country from 16 363 in 2015 to 47 362 by end of July 2017.
Similarly, there has been a corresponding jump in POS transactions from 398 986 in 2009 to 181 251 082 in the last quarter of 2017. The sharpest rise in POS transactions was witnessed from 2016 when they rose from 53 407 464 to 181 251 082 by about September last year.
But beyond increasing availability of POS machines, Government also wants plastic and electronic transaction costs to come down markedly. Customers still complain that it remains expensive to transact on plastic and electronic money platforms despite efforts by the Reserve Bank of Zimbabwe to have charges reduced.
The RBZ has asked retailers to charge 10c for transactions of between US$1 and US$10. However, there is a feeling by consumers that the cost skyrockets when one purchases smaller items such as bread and milk more than once per day. Deputy Minister Mukupe said Government is alive to the need to reduce transaction costs and is considering coming up with incentives to firms that slash such costs.
“We have to make sure that the cost of transacting comes down. We will come up with incentives around that. The other thing that I want to point out to you is that Minister Chinamasa, in his budget, has said he does not want to come up with punitive measures, but incentive measures (for companies that play ball),” he said.
Mobile money transaction costs have recently been pushed up by corrupt dealers who sell cash at 20 percent. EcoCash, which controls over 90 percent of mobile money transactions, has challenged customers to report unscrupulous dealers so that corrective action is taken.
Even wholesalers and retailers are putting a premium of up to 30 percent when consumers are purchasing using electronic forms of payment, with products being considerably cheaper when using physical cash. Despite several warnings from both the Ministry of Industry and RBZ to abandon multi-tier pricing, sellers remain defiant.
Traders mark high prices for goods when consumers are making electronic payments to encourage them to use cash, which will in turn be used for arbitrage. Government’s financial inclusion initiatives also target broadening access and provision of vulnerable groups with financial services, critical for sustainable economic growth and development.
The vulnerable groups include youths, women and micro, small and medium enterprises. This has seen the RBZ licence the Zimbabwe Women’s Micro-Finance Bank Limited on September 14 last year, and has also initiated licensing of the Youth Empower Bank Limited.