HARARE – Mobile money and other digital finance platforms might have proven to be highly useful in Zimbabwe, but they have also become major drivers of hyper-inflation, according to some experts.
This is forcing a rethink back to cash, still largely seen as the king of transactions settlement, especially in the Zimbabwean and broader African context.
EcoCash, powered by Econet Wireless, is the dominant mobile money platform in Zimbabwe, although Telecash and One Money have also been upping the competition. But then cash is in short supply in Zimbabwe, a country that continues to suffer under a financial sector crisis.
The public accountants and auditing committee recently gave the green light for listed companies to apply hyper-inflationary principles for financial reporting purpose. This is the first such official confirmation of Zimbabwe reverting to hyper-inflation which ravaged the economy before abandonment of the local unit in 2009.
The hyper-inflationary situation in Zimbabwe has given rise to multi-tier pricing, higher prices for payment through mobile money and relatively lower prices for cash.
“Mobile money is again in the spotlight of controversy (in Zimbabwe). The main charge: in an inflationary environment, a tiered currency system exacerbates currency devaluation,” said experts at digital finance advisory firm, Mondato.