The designation of ZimSwitch as a national payment system is poised to synchronize the use of both mobile and digital payments in Zimbabwe under one platform that can be easily managed and monitored by the central bank. The development came at a time when monetary authorities were struggling to arrest the runaway inflation and the fast depreciation of the Zimbabwean dollar. Zimbabwe’s central bank thought that it would be prudent to limit transactions on mobile money platforms, which it blamed for fuelling inflation and the parallel foreign currency market.
While some users on the mobile money platforms could have abused the facility for their own selfish ends, the rapid devaluation of the local currency and subsequent price increases of basic food commodities mostly emanate from bad economic policies as well policy inconsistent. The southern African nation is not producing enough goods and services that can be exported to generate the much needed foreign currency. As such, most people and companies have resorted to buying foreign currency on the streets to import critical raw materials and goods for resale in the country, a situation that is fuelling demand for foreign currency.
While the introduction of ZimSwitch as a national payment system is expected to bring sanity and transparency in the country’s digital and mobile money sector, it will not in the long term address Zimbabwe’s economic challenges. The country simply needs strong economic policies to stimulate production in every sector of the economy. In addition, the new development will also stifle growth of the mobile money ecosystem, which have created direct jobs for over 60 000 people and more than 100 000 jobs in downstream industries.
According to a recent Finscope survey, more than 70 percent of Zimbabwe’s adult population do not have bank accounts and do not trust the formal banking system due to legacy issues where most people lost their income in 2008 at the height of hyperinflation. Now the use of ZimSwitch as a national payment system will give birth to start-up businesses. However, until the government fully addresses the underlying currency problem in the country, Zimbabweans will always find platforms to mitigate and ‘solve’ the issue themselves.