Use of Plastic Money in Zimbabwe, Threats and Opportunities for Rural Communities

Abstract

Since the Zimbabwean economy adopted the US dollar as a major currency in 2009, rural communities have remained marginalized in terms of access to financial products and services. The research study evaluates the use and adoption of plastic money by rural communities in Zimbabwe. A descriptive research design was adopted to assess the use of plastic money by rural financially active citizens in Masvingo Province. Data was collected from a sample of 300 respondents using a self-administered questionnaire and analyzed using selected econometric computer packages. The research study established that the majority of rural communities in Zimbabwe had no access to plastic money facilities and therefore transacted mainly using cash and mobile money. This was largely due to lack of plastic money facilities among rural service providers, lack of adequate knowledge on importance of plastic money, low income levels and lack of confidence in the overall financial system. It was concluded that very few financial institutions served the rural market, and those that, did relied on agent banking. In addition, the majority of retail operators are importers who only accept cash as a means of settlement. It was recommended that banks should market their products and services to rural markets through awareness campaigns on the benefits to be drawn from adoption and use of plastic money. The central bank through its monitoring and supervisory function should continue to assess the extent to which banks and other financial institutions are serving the needs of rural communities. Point of Sale (POS) transaction costs should be reduced further to allow low income earners to transact even in smaller amounts without feeling the pinch, otherwise the goals of the National Financial Inclusion Strategy will be unachievable by 2020.

Civil Servant Borrowing Practices: A Determinant of Poverty in Zimbabwe

“…In response to the liquidity constraint, the Reserve Bank has adopted a series of policy Business and Economic Research ISSN 2162-4860 2020 measures aimed at alleviating cash flow problems, including the importation of liquidity, the promotion of the use of plastic currencies, and cash withdrawal limits (Munyanyi, Diza, & Gumbo, 2017;R.B.Z, 2016a). However, even though the use of cashless payment channels increased in the economy, the demand for cash and households' willingness to use cash continued, since goods and services were much cheaper when purchased with cash as compared to plastic currencies.…”

Customers’ Perceptions about Plastic Money towards Sustainable Banking in Bangladesh: A Technological Adoption

“…The usage of innovative electronic trading devices defend the elderly population from theft and fake cases since such cards in his/her wallet can be used immediately and easily in each transaction. Diza et al (2017) focused on plastic money acceptance among rural communities in Zimbabwe. The communities still prefer cash over plastic money, although they cited "anytime anywhere access as major advantage of plastic money.…”

Embrace Plastic and Mobile Money or Face Demise: Experiences of Subsistence Micro and Small Entrepreneurs in the Bulawayo Metropolitan Province, Zimbabwe

“…According to Gumbo (2016), the world over has experienced an increase in the use of plastic money as a security measure and an efficient way of conducting transactions. Diza, Munyanyi & Gumbo (2017) and Sanderson (2016) assert that Zimbabwe is no exception as more businesses have also embraced plastic money as the country continues to experience banknote shortages. Dzingire (2018) agrees that Zimbabwe has been facing cash shortages since 2016 and the situation worsened from 2017 to date.…”

“…Dzingire (2018) agrees that Zimbabwe has been facing cash shortages since 2016 and the situation worsened from 2017 to date. Diza et al (2017) are of the view that using cash for everyday transactions becomes a challenge if a country has a cash crisis like the one obtaining in Zimbabwe. Contrary to the aforementioned, a study by Kaseke (2012) and Nyakuyedzwa, Mutanga & Siwadi (2014) revealed that the uptake of plastic money technology by Zimbabwean consumers and merchants alike had been slow since the Zimbabwe dollar's inflationary era.…”

“…Sanderson (2016) reports that a research conducted by IH Securities revealed that the previously mostly unbanked individuals dwelling in the informal sector had been forced to adapt to non-cash channels, which include plastic money. According to Diza et al (2017), in 2016, Zimbabwe adopted the National Financial Inclusion Strategy 2016-2020, whose aim was to bring financial products and services to individuals and entities who were not part of the formal banking system voluntarily or involuntarily.…”