Kudzanai Gerede Business Correspondent
Zimbabwe’s financial sector is undergoing a massive electronic payment infrastructure boom as the country strives to modernize its payment systems to ease pressure on demand for hard cash, Reserve Bank of Zimbabwe National Payment System first quarter report reveals.
For the past four years, the economy has been subjected to serious cash shortages under a multi-currency system, prompting the Central Bank to promulgate electronic payment usage to mitigate the cash crisis.
Since then, the RBZ has contracted several suppliers of Point-of-Sale (POS) machines which allow local payments through bank cards as it envisages 100 000 POS machines by year 2020.
From just about 16 400 Point-of-Sale (POS) machines at the start of 2016, the Central Bank has recorded 70 960 POS machines as at 31 March 2018, an 18.3 percent increase from 59 939 that were there same period last year.
“POS population increased to 70 960 from 59 939 in line with the promotion of electronic means of payment and ATM population increased to 563 from 561,” said the RBZ in its National Payment System first quarter report.
The development has yielded phenomenal results as formal payments processed by the Central Bank reveal that of the $ 1 billion transactions in 2017, $975 million processed in the entire country were through electronic and mobile banking systems
However milestones in setting up robust e-payment infrastructure face a stern test under the current prevailing conditions in the economy.
Observers who also welcome the Central Bank initiatives on electronic money usage point to the fact that there is a substantial amount unaccounted for in the National Payment Systems that is circulating in the informal channels within the informal sector where there is a high propensity for hard cash.
This is backed by the fact that the value of transactions processed through the National Payment Systems in the first quarter ending March 31, 2018, decreased by 9 percent to $ 28,87 billion from $ 31,7 billion recorded in the previous quarter ending 31 December 2017. The volumes decreased by 4 percent to $377,5 million from 391, 6 million during the same period.
“There is a lot of cash exchange on the informal market where traders are buying cash at high premiums and that cash is not being banked but is circulating among small traders hence figures of cash transactions in this segment do not reflect on National Payment Systems at the Central Bank,” said economist Kipson Gundani.
This is further highlighted by low levels of banked SMEs in the country.
The Central Bank report states that of the 5,5 million bank accounts, only 57 512 SMEs have bank accounts which translates to only 1 percent of total bank accounts.
What this entails is, of the several millions of productive citizens in the country who are trading goods or owing small enterprises is unbanked, a tale of contrasting fortunes between milestones achieved so far in electronic payments systems infrastructure and financial inclusion of economically marginalized groups.
This has also seen loans disbursed to SMEs by banks only limited to 3 percent.