Re­moval of point of sale fees plau­si­ble

The Manica Post - - Comment & Feedback -

THE short­age of cash in the banking sec­tor has been a thorn in the flesh for the Re­serve Bank of Zim­babwe.

With some of the apex bank’s pow­ers eroded by the use of for­eign cur­rency fol­low­ing the demise of the Zim­babwe dol­lar in 2009, the bank’s author­ity was de­pleted sig­nif­i­cantly.

Prior to 2009, the bank’s note printing divi­sion, Fidelity Print­ers had pro­vided it with a life­line when there was need to in­ject more money into the econ­omy al­beit the in­fla­tion­ary out­comes of this in­ter­ven­tion.

Now armed with the ex­pe­ri­ences of yes­ter­year record in­fla­tion, RBZ is wiser not to print money and trig­ger run-away in­fla­tion. How­ever, the RBZ’s avoid­ance of printing more bond notes backed by Afrex­im­bank United States dol­lars fa­cil­ity did not solve a year old short­age of cash in the banking sec­tor since the coun­try is ex­port­ing more US dol­lars than it can im­port be­cause of the trade deficit char­ac­ter­is­ing the econ­omy. Mean­while, the bond notes are not le­gal in­ter­na­tional ten­der.

The haem­or­rhage of the US dol­lar into our im­port des­ti­na­tions has not been met with com­pen­satory ex­port earn­ings.

On the do­mes­tic front, the de­mand for cash con­tin­ued be­ing pushed by un­sus­tain­able cash­less trans­ac­tion fees, the short­age of cash­less trans­act­ing tech­nolo­gies and mar­ket spec­u­la­tion over the per­ceived value sta­bil­ity of hard cash.

The short­age of POS ma­chines in the re­tail sec­tor has also failed the trans­act­ing pub­lic in a huge way, with some busi­nesses de­mand­ing cash only for their goods and ser­vices.

The pub­lic has on nu­mer­ous oc­ca­sions com­plained about Gov­ern­ment’s slow im­ple­men­ta­tion in­er­tia on ac­cept­ing plas­tic money on some of its prod­ucts and ser­vices as a re­li­able pay­ment op­tion.

The Min­istry of Home Af­fairs’ Po­lice De­part­ment, ZRP’s CID sec­tion at Mor­ris De­pot is one such en­tity not ac­cept­ing cash­less pay­ments; nei­ther has the Traf­fic Sec­tion gone fully cash­less.

Do­mes­tic rentals, com­muter buses and in­for­mal hor­ti­cul­ture traders are some of the strong­est op­po­nents of plas­tic money. Some of their strong­est ar­gu­ments sur­round puni­tive bank charges, difficulty in se­cur­ing POS ma­chines and uncertainty on get­ting their money at the banks as and when they need it.

Some of the peo­ple in­volved in the above busi­nesses are also cross bor­der traders who need hard cash to im­port the var­i­ous wares they also sell for cash alone in or­der to re­coup the cash they would have in­vested. Th­ese types of busi­nesses have con­tin­ued pil­ing pres­sure on the banks to give cash which the banks do not have.

This sce­nario has cre­ated never dy­ing queues at banks through­out the month. The RBZ has to act over and above the $175 mil­lion worth of bond notes it has dished into the econ­omy so far.

The re­moval of the five per­cent POS trans­ac­tion levy by the RBZ as an­nounced by the Min­is­ter of Fi­nance, Cde Pa­trick Chi­na­masa in his mid-term bud­get re­view last Thurs­day, is a step in the right di­rec­tion in pro­mot­ing cash­less pay­ment sys­tems.

Last month, the big­gest mo­bile money trans­act­ing plat­form, Eco­cash in­tro­duced a toll­gate pay­ment sys­tem to re­move the headache mo­torists faced in cross­ing toll­gates as ZINARA de­manded cash only.

This month, Eco­cash went a step fur­ther by halv­ing user fees. Th­ese are ben­e­fi­cial Gov­ern­ment-Busi­ness syn­er­gies meant to soothe the cash pay­ments pains in the econ­omy.

Fur­ther­more, the re­duc­tion and re­moval of trans­act­ing fees would im­mensely re­duce the de­mand for cash and re­duc­ing bank queues. The onus re­mains on other eco­nomic arms of Gov­ern­ment to deal with trade deficit is­sues which con­tinue to de­plete the coun­try’s for­eign re­serves through hard cash leak­ages into im­port com­mit­ments and nos­tro ac­counts set­tle­ments. While the mar­ket cel­e­brates the re­lief pro­vided by the RBZ and Eco­cash, other stake­hold­ers in the mone­tary sys­tem must be en­cour­aged to seek so­lu­tions to help the econ­omy.

Like­wise, other mo­bile pay­ment plat­forms must em­u­late Eco­cash and re­duce trans­ac­tion charges.

Banks must also in­vest in im­prov­ing their bank net­work, im­port more POS ma­chines. Gov­ern­ment is duty bound to in­cen­tivise banks by re­mov­ing im­port duty on POS ware and con­sider sub­si­dies on them.

The civic move­ment must also lobby cash savvy busi­ness en­ti­ties and in­di­vid­u­als to em­brace cash­less trans­ac­tions as a safe and con­ve­nient pay­ment model ahead of cash. In the same vein, pen­sion­ers must be as­sisted to join the plas­tic move­ment.

Chigumbu Warikandwa

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