Zimbabweans embrace credit cards

THE usage of plastic money has increased by more than 400 percent in the last five weeks as Zimbabweans embrace credit cards amid the cash shortage. Plastic money entails cashless ways of conducting business which include the use of credit cards at point of sale machines.

The Reserve Bank of Zimbabwe this week announced a reduction of charges for all electronic transactions as a way to promote the usage of plastic money.

The Minister of Finance and Economic Development Patrick Chinamasa told senators on Thursday that embracing plastic money was easing demand for cash.

He was responding to questions by senators who wanted to know what the government was doing to ease the cash crisis as the country awaits the introduction of bond notes. "As I speak, over the past four or five weeks, we have seen a quantum leap in the usage of plastic money — an increase of more than 400 percent.

"We are encouraging honourable senators here to resort to the use of plastic money because this will reduce the demand on the US dollar which as you all know, we do not print," said Minister Chinamasa.

"… plastic money usage has been popularised amongst corporates. We hope that this multi-pronged approach will go a long way towards assisting and reducing the demand on the US dollars." He said apart from the strength of the US$ against other currencies, hoarding of hard currency was worsening cash shortages.

"For an economy to run, you must have a currency which is circulating. A unique challenge for Zimbabwe — by the way we are only one of three countries which use the US$ for funding, both imports and domestic transactions but the trick always is, the money should circulate," he said.

"We use the US dollar both, as a store of value, as a medium of exchange and to fund our imports. Increasingly, people are taking money out of the financial service sector and storing it for value. That is what has created the problem, hence the promotion of plastic money." Minister Chinamasa said the country is in the process of tightening screws on cash circulation saying the liberal monetary policy being used was prone to abuse.

He said before the government introduces bond notes between September and early October his Ministry will embark on awareness campaigns both in urban and rural areas to dispel myths associated with bond notes.

For the past few months the country has been experiencing a serious cash shortage attributed to externalisation of money. This has led to long winding queues at most banks some of which have drastically reduced maximum cash withdrawals to as little as $50 per day.