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Rumbidzayi Zinyuke
FOR about seven years since the dollarisation of the Zimbabwean economy, consumers have mostly used cash to pay for goods and services regardless of how small or large their purchases were.

As the US dollar edged out the rest of the currencies in the multi-currency basket to become the currency of choice by both retailers and Government, cash also became the predominant form of payment in the southern African country.

Even the small retailers that mushroomed across the country preferred to transact using cash to get their hands on the strong US dollar. But the world over, the use of hard cash in making payments has largely been overtaken by electronic payments. Not only have electronic transactions provided convenience, analysts believe it also plays a crucial role in stimulating economic growth.

According to a report on “The Impact of Electronic Payments on Economic Growth” by Moody’s Analytics, electronic payments provide consumers with convenient and secure access to their funds and reduce cash handling for retailers.

“More importantly, they promote greater financial inclusion, giving governments a greater ability to collect additional tax revenue by reducing the number of unreported transactions in the gray economy,” the report says.

Moody’s estimates that higher card usage contributed an additional $296 billion to consumption between 2011 and 2015, or a 0.1 percent cumulative increase in global GDP during the sample time period. African countries are said to have experienced on average a 0.05 percent increase in GDP due to increased card penetration in the same period.

South Africa, in particular, has already registered a considerable increase in GDP from additional card usage as a result of a developed financial services system. While Zimbabwe still has a long way to go before the economy can benefit from the use of plastic money, there have been some notable changes.

A rapid rise in the informal sector in the past year has cost large retailers and Government a lot of revenue as consumers preferred to buy commodities on the streets. But the cash shortages that have characterised the year 2016 have seen the same consumers returning to the big shops to use POS machines with the hopes of getting a bit of money back through the cashback facility.

In October 2016, the number of point of sale transactions nearly doubled to 4 758 while the value of POS purchases increased by 38,7 percent to $190 million in the same month from $137 million a month earlier, reflecting a rise from $36 million since March. The increase in the number of POS transactions followed the sharp increase in the number of POS machines deployment in the market as well as deployment of POS machines in major retailers and service stations. But there has been a downside for the consumer.

Supermarkets that had been forced to reduce the prices of basic commodities in response to the competition posed by street vendors are now slowly returning to old prices.

Last month, some retailers were even demanding cash payments for cooking oil purchases arguing that manufacturers were demanding hard cash since they were also “required” to fork out cash by banks to facilitate foreign payments for unprocessed edible oil. Similarly, some fuel dealers have been actually giving discounts for motorists who paid in cash.

Market watchers believe these retailers have even factored in minor price increases to “cushion themselves” against the increased use of plastic money.

A snap survey showed that several fuel retailers have factored in a price increase of between two cents and eight cents in the past four weeks.
Diesel, which was selling at $1,18, now costs about $1,20 while petrol is selling at $1,34 from about $1,26 at some service stations.

“We have seen an increase in card sales in the past month or so and this has contributed to the slight increase in fuel prices,” said one Zuva Service Station fuel attendant who preferred to remain anonymous.

This development comes even as Government and the central bank have prioritised fuel companies on foreign payment allocations to enable them to meet their requirements.

Despite all this, electronic payments remain the cheapest form of making purchases. What with banks charging up to $5 for a withdrawal of as little as $100, it makes more sense to use debit cards and pay only 45 cents for a transaction of the same amount. As for businesses, as they move to electronic payment processes, many are gaining efficiencies, saving overhead costs and helping to reduce their compliance risks.

And the more transactions that are captured in the mainstream economy, the more revenue accrues to Government, which has been pushing to have all companies in the country fiscalise in a bid to improve tax collection

Fiscalisation allows the Zimbabwe Revenue Authority (Zimra) to get information on transactions in real time, which minimises the chances of revenue leakages.

The project was introduced six years ago when Government gazetted Statutory Instrument 104 of 2010. Only those companies whose annual turnover was more than $240 000, qualified to register for the fiscal devises. Now, as provided for in Section 80 of the amended Income Tax Act, Zimra is introducing fiscal devices for all companies in an attempt to monitor economic transactions. — Zimpapers Syndication.