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NextGen Magazine


80 Percent of Transactions in Zimbabwe Are on Mobile Phones—But the Power Often Goes Out

Chris Gaetano
Published Date:
Sep 3, 2019

Zimbabweans have taken to mobile payments as have few others in the world, but as an economic crisis deepens, regular power outages have ground the nation's economy to a halt, according to the Wall Street Journal

Right now, eight out of 10 transactions in Zimbabwe are conducted on mobile phones, the vast majority of which are completed on a payment platform called EcoCash. This is in marked contrast to the United States, where even the most popular mobile payments platform, Walmart Pay, has been used by only 24 percent of all adult smartphone users, with the next most popular, Apple Pay, reaching just 13 percent penetration.

This widespread adoption is, according to the Journal, largely an effect of years of financial and monetary mismanagement by the Zimbabwean government. Battered by hyperinflation, which eventually saw the issuance of $100,000,000,000,000 ($100 trillion) notes (which were worth about 40 U.S. cents), the nation eventually declared in 2015 that it would use the U.S. dollar as its main currency. While this did help stabilize the economy somewhat, it brought about another problem, which was that there just weren't enough U.S. dollars to go around. In response, the government began printing bond notes that were meant to be functionally equivalent to U.S. dollars even if they were not in fact from the United States, with their value backed by a $200 million package from the African Export-Import Bank. But the Journal said that this measure had the effect of devaluing non-cash money, which led to the government this year banning local trading in any foreign currency and reintroducing the Zimbabwean dollar, which immediately began to inflate. 

With little faith in their own country's cash, Zimbabweans increasingly turned to mobile payments as a lifeline, and now the country operates as a mostly cashless society. This reliance on mobile payments, however, has created a parallel reliance on electricity to conduct transactions, a dangerous proposition when the power is routinely out for 17 hours at a time. No power means no payments, which means people can't buy even basic items such as milk or gas when the electricity is out. This has, in turn, served to devalue digital dollars, with some traders now charging premiums of up to 40 percent to convert balances to physical cash. All the while, the country itself is struggling to pay back its overdue World Bank loans, which has limited its options for other types of foreign aid.