Even if Zimbabwe bans Ecocash today, it doesn’t mean that tomorrow we will solve the cash crisis


By Ngoni Chihombori

This week, on October 1, 2019, the Reserve Bank of Zimbabwe (RBZ) issued National Payments Systems Directive NPS01/2019, barring with immediate effect all Ecocash cash in and cash out functionalities as well as the cashback function from point of sale terminals.

This according to them was a way to deal with the Ecocash agents who were charging in some instances as high as 60% premiums for one to access physical cash.

In layman terms, in order to access ZWL $100 in cash, one had to part with ZWL $160 in electronic money. How did we get to this point though – where selling cash has become such a thriving business?

In any normal functional economy, when one needs cash, one easily walks to a banking hall or an automated teller machine (ATM) and makes a simple withdrawal for whatever their cash needs.
Many people haven’t bothered to investigate why this is not the case in Zimbabwe.

I believe understanding the root cause of this problem will lead to Zimbabwe solving the current cash crisis.
Anything else is tantamount to treating symptoms.

As of the latest RBZ figures released in the June Monthly Economic Report, total deposits from the public and government stood at ZWL 14.79 billion.

The amount of bond notes and coins in official circulation within the banking system was only ZWL 126.3 million. This figure comes to less than 0.9% of the total deposit base being cash in official circulation.

Where is Zimbabwe’s money? Here is the answer

According to the same report, a total of $597.8 million of bond notes and coins has been issued to date by the central bank, this only represents 4% of the total deposit base in the country.

One would wonder where is the other ZWL471 million in bond cash?

The answer to that question is that most of it is at Park Station, Musina, Beitbridge border post, Forbes border post, Francistown, while you will also find a good amount of it at Roadport, Copa Cabana, outside Joina City, Ximex and Eastgate shopping malls.

Cash has become a very lucrative commodity for speculators.

Now rewind back to 2014, during the time when there was relative stability in the economy and cash queues were only restricted to the imagination of one’s own creative mind.

ATMS were churning out crisp benjamins everywhere you went, and one could easily walk to an ATM and withdraw $2000 in USD cash at one go.

According to the same RBZ Monthly Economic Reports, the same average cash circulating in the official banking sector: total deposits ratio stood at an average 16%.

This same ratio is 0.9% today, as of the latest published RBZ figures. The prescribed average in normal stable economies world over for this ratio is 15% – 20%.

One would then also wonder, armed with all these statistics, why aren’t the monetary authorities acting appropriately to solve this huge source of dislocation in the economy.

If you were to ask me this question, my answer to you would be the 2% Intermediated Money Transfer Tax (IMTT tax) levied on all electronic transactions which was introduced by the finance minister, Professor Mthuli Ncube.

Ever since the learned Oxford Professor assumed office, the economy has been marred with unending fuel lines, 18-hour daily powercuts, skyrocketing prices of commodities, a failing currency which has lost over 93% of its value in the past 7 months, company closures and general untold suffering among the populace.

The only thing the finance minister has to show is the “supposed surplus”, treasury has recorded over the first half of the year.

The entire basis of this surplus is a massive boost to government revenues due to the 2% IMTT tax levied on all electronic transactions in a country where 90% of transactions have gone cashless due to the increased recent adoption of electronic money as a result of the prevailing cash shortages within the economy.

Mthuli Ncube has no incentive at all to address the shortage of notes in the system, as the solution to the prevailing cash crisis implies him losing his very beloved 2% IMTT tax.

Here is the root cause of the crisis

Here lies the root cause of the cash crisis in the Zimbabwean economy.

This is the real issue, good meaning and patriotic Zimbabweans should be channelling their energies to address rather than focus on Ecocash agents who have only found themselves an avenue to harness and partake from some of the many arbitrage loopholes in the heavily dislocated Zimbabwean economy.
Even if Ecocash were to be entirely banned, Zimbabweans are not going to suddenly wake up to ATMs and banking halls dispensing cash all over the central business districts.

The simple solution lies within the Reserve Bank of Zimbabwe. It is important to note that what is needed is more cash in the system, rather than new money.

The Reserve Bank of Zimbabwe simply needs to ensure that some of the excess electronic money within the system is exchanged for physical cash. This process does not require the creation of any new money. Will the Government move in to address this challenge and sacrifice its sweet 2% revenue?

That is another question all together which I will not attempt to tackle in this short piece.


My name is Ngoni Chihombori and these are my personal opinions. I work as an analyst for a corporate finance advisory firm in Harare.



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