Helen Kadirire 23 April 2017
HARARE – As President Robert Mugabe’s government struggles with a cash
crunch that has forced people to spend hours at banks queuing for money,
several small businesses across urban and semi-urban areas are busy
requesting the Reserve Bank of Zimbabwe (RBZ) to set up card-swipe
machines or point-of-sale machines (POS) so that they do not lose business
to their more tech-savvy rivals.
The machines facilitate acceptance of payment from customers by swiping of
their debit, credit or pre-paid cards on the POS terminals.
Following the introduction of bond notes in November, the US dollar was
completely wiped out of the system.
Now the surrogate currency is also in short supply, with the RBZ moving to
limit the cash-back facility to a maximum $20 per customer in attempts to
ease worsening cash shortages.
Banks have also reduced their withdrawal limits from $100 per day to $30.
A central bank official said there has been a sharp rise in demand for
Pos, saying the apex bank has recorded a three-time jump in demand for the
machines over the last few months.
While the official did not specify the quantum of increase, he said: “We
have witnessed a sharp increase in demand for our payment solutions at
merchant outlets and for deployment of Pos machines – significantly higher
than our weekly average.”
The requests are coming from new categories of merchants such as beauty
salons, small stores, even vegetable vendors.
This surge in demand builds on a trend. POS transaction volumes surged 260
percent in 2016 on the back of the cash crisis after the country processed
transactions worth $2,9 billion in 2016 from $1,7 billion processed in
The 2017 monetary policy statement delivered by RBZ governor John Mangudya
in January indicated that there were 52,4 million Pos transactions in 2016
up from 14,5 million in 2015.
This was the first time since the adoption of a multi-currency system in
2009 that the value of Pos transactions exceeded ATM values, indicating
another migration from ATM activity which is also a reflection of cash
circulation through registered banks.
Market experts anticipate POS volumes to surge again this year on the back
of a deepening cash crisis and increased Pos infrastructure, putting more
strain on the system.
Bankers say that the surge in demand for POS machines is good news for the
Said a banker: “Earlier, a lot of merchants discouraged customers from
using their cards. Now that they are installing them, it will
significantly raise the quantum of e-transactions.”
Card transactions also improve cash management and enable speedy payment.
POS machines are provided by the central bank and anyone with a registered
and valid business establishment is eligible.
Bankers Association of Zimbabwe (Baz) president Charity Jinya told the
parliamentary portfolio committee on Finance and Economic Development that
the country’s banking system was overwhelmed due to increasing
Jinya argued that the country, accustomed to a cash system, was on the
verge of crashing banking systems as e-transactions were surging on the
back of increasing cash-lite transactions.
“It is no secret that the system is presently overwhelmed. It has never
processed this many transactions before as people used to rely on cash
transactions,” she said.
The Real Time Gross Settlement System (RTGS) still dominate the bulk of
transactions by value, accounting for between 70-80 percent on a weekly
basis, while mobile dominates the volume of business, also with between
70-80 percent of all transactions.
Taurayi Marembo, the chairperson for Harare Chamber of SMEs, said small
business were being urged to adapt to the use of plastic money in the same
way big businesses have done.
“The most common questions I have been asked by the majority of SMEs as we
move around registering those who want POS machines for their businesses
and encouraging their acquisition are, `how will I restock because where I
order my stocks they want cash? How do I get my money if I want cash as
the banks do not have cash? How do I get forex when I want to restock
outside the country where I get my goods?’
“I think by now the majority of wholesalers should be having POS machines.
Those who do not have POS machines by now are the ones who are among that
group of mercenary business people hunting for US dollars and
“It is a pity the RBZ doesn’t have a law that makes it compulsory for
wholesalers to have POS machines,” Marembo said.
Mangudya has been pushing measures to encourage the use of credit and
debit cards as a means of reducing pressure on physical cash transactions
amid a biting bank note shortage in the country.
Economist Vince Musewe said though there are multiple factors to the
current cash shortages, the biggest is that there are no cash inflows into
“Foreign-owned businesses do not put money back into the system but
instead take it outside when they are importing their goods for re-sale.
“Again, people within the region have been coming to Zimbabwe and
exporting the US dollar, leaving the country with nothing. Now
re-importing cash will be just too expensive. Ultimately our trade deficit
is still too high because whatever is being imported is not for production
but consumption, which will only sink the economy even deeper,” Musewe
He, however, said that while the temporary solution was to use plastic
money considering that $6 billion was in the RTGS system, infrastructure
for implementation was still inadequate.
Senior economic consultant Ashok Chakravati said the general shortage in
bond notes is because when they introduced the fiat currency, it was
pegged at the same rate as the US dollar.
Chakravati said the country is in a Catch-22 situation because even if
they print an additional $100 million in bond notes, it will still not be
enough to curb the cash shortages.
“We need about $1 billion in circulation to avoid any cash shortages.
However, the issue is where to get it considering that we do not have
adequate export earnings. Under the current system, the only viable
alternative is to adopt the rand as currency,” he said.
Joseph Mverecha, an economist with a local commercial bank, said if
Zimbabwe is to have any chance of re-introducing her own currency inside
the next decade-and-a-half – the rand is the only option “and we can have
that option, without necessarily joining the (Rand) Customs Union.”