Incentivise use of official financial channels: Analysts

ECONOMIC commentators have implored the government to enhance measures that encourage businesses and individuals to use the economy’s official financial system.
This comes as other countries are migrating to a cashless society, but Zimbabweans still believe in using hard cash.
Economist Prosper Chitambara told The Financial Gazette that only a few Zimbabweans trust local banks, so much so that they prefer to deal in cash as opposed to using bank cards.
“Enhancing uptake of plastic money or debit cards I think, obviously, we need to ensure that a lot of our population has access to the banking system or the banking sector.
“The issue of financial inclusivity is critical, and we need to stabilise the situation so that there are incentives for formal banking because as long as it’s costly to bank, there will be no incentive for people to want to bank because without a bank account, you don’t have access to a debit card,” he said.
Chitambara said there is a need to incentivise banking by reducing the cost of banking and stabilising the macroeconomic situation.
“That would be critical, then provide the right kind of infrastructure to support that, so a cashless society obviously has lots of advantages. It’s convenient; you don’t have to move around with cash, so it’s also safer and more secure.
“It makes payments easier and faster to make, so it’s an effective payment system and payment platform,” he said.
At least 73 percent of Zimbabwe’s 15 million population uses cash, according to 2022 census results, and this contrasts sharply with 17 percent who use bank cards and 10 percent who use mobile money platforms.
Small and Medium Enterprise Association of Zimbabwe (SMEAZ) chief executive, Farai Mutambanengwe, told The Financial Gazette that there was a need for regulators to lower transaction charges.
“If you look at Zimbabwe, most people had actually moved to using debit cards, but they have since moved back to using cash because of the costs of using debit cards. You find that the charges are exorbitant, so people would rather deal in cash than through electronic money.
“We have charges like the intermediated money transfer tax, and even penalties for forex, where you would get compulsory liquidation, and so on. So all of those things are what push people away from using electronic money and the solution is to make sure that it’s just as easy to use a card as it is to use cash.
“If you look at other countries, you don’t get charged for using a debit card and you also earn interest on money that is sitting in your account, so naturally people would prefer to use formal banking channels and use electronic money compared to cash,” he said.

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