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Why digital money makes sense

19 Jun 2018 at 06:56hrs | Views
William Arthur Ward was an American who contributed a lot to the Reader's Digest. His main genres were inspirational maxims and meditations and poems. One of the things he said was: "A pessimist complains about the direction of the wind, an optimist expects it to change but a realist adjusts the sails."

This philosophy seems to drive the current Zimbabwean Government which is now known by the moniker New Dispensation or the ED Administration. Whilst the issue of sanctions against Zimbabwe is real and has a devastating effect on the economy, the new thinking is not to wallow in our misery but to make the best of our circumstances and do something that changes the fortunes of our nation.

In other words, there is a tide against us, we either complain and moan that the West is unfair and say that geopolitics is skewed against the Global South as all other such moans but that won't change a thing. We can opt to wait quietly and hope things will change but still we would be subjecting ourselves to circumstances and in the process pick up the tag of victim-hood again but that will probably change nothing.

The only other option is to be realists and adjust our sails in response to these treacherous winds of economic misery and give ourselves not only a fair shot but a prosperity chance. This is the thing that has found resonance with this writer and struck a very clear chord. We have to adjust or change. Somebody else said that the only permanent thing is change itself.

Whilst change is painful, there is nothing worse than getting stuck in a permanent condition everyone knows is catastrophe. But before we get some people excited about the use of the word "change", we will have to add that the biggest change in life is not a change of personnel but a change in attitude. This is being the change that will drive every other change someone might have in mind.

One area we need to have a shift of mindset on is the matter of cash shortages. Some of the reasons we find ourselves in this situation are those measures against us due to continued efforts by some of our compatriots to ensure those measures are not removed or even relaxed. If they were not effective they wouldn't be making such an effort. Be that as it may, the point is, we have cash shortages in Zimbabwe. The New Administration has adopted a policy that the best way here is to promote the use of electronic money which is also known as digital money.

This has been met with cries of "clueless" among other uncomplimentary views. But the plain, albeit painful, truth is that this is a serendipitous happenstance and one to which the Government is adjusting the sails in a dexterous way. It's a phenomenal dive into the digital age.

We can't resist everything wanting the status quo ante. A few hours before Zimbabwe celebrated its 37th independence anniversary, then education minister Dr Lazarus Dokora made a suggestion that caught the attention of the world media including the BBC. He said that because of cash challenges parents were facing they could use goats to pay for their children's school fees. Some international headlines screamed, "Zimbabwe's New Goat Currency".

Some were outraged and from that moment Dr Dokora was a figure of hate. He had his back to the wall from that time until he went back to teaching. The main umbrage with techy-savvy Zimbabweans was that they felt they were being taken back to the Stone Age where barter trade was the norm.

They could not think of a person going to buy school uniforms tagging a goat on a leash for some barter exchange and going to buy a car with a herd of cattle and other highly inconvenient exchanges. They felt that would surely be retrogressing, and you know what? They were right.

Now the new solution that is being proffered is quite practical and real. It's not some fanciful promise to resolve the cash challenges within two weeks of inauguration. It's taking Zimbabwe well ahead of its contemporaries but just like in the goat economy issue, there is inexplicable resistance. Just as cash replaced barter trading, virtual money is replacing cash. India scrapped 86 percent of its banknotes in a bid to run a cash-light economy as a progressive move towards a cashless economy. South Korea wants to phase out coins by 2020, which is basically 18 months from now. There is a serious move towards a cashless economy. Cashless economy is an economy in which transactions are made by debit cards, credit cards, cheque or direct transfer from one account to another and mobile platforms.

Cash is not going to survive much longer and if Zimbabwe can be one of the countries that can be cash-light then by all means ED is right to convert this fluke into an opportunity. Zimbabwe has grown in leaps and bounds in its use of computer technology in executing financial transactions. Cash is no longer king. Business mogul Dr Philip Chiyangwa has to find a new signature slogan because soon, "Apa hauna cash" is going to be redundant. Most car dealers in the United Kingdom no longer accept cash for payment even on cheap used cars. Wads of cash trigger security alerts of money laundering or other dark economic activities including terrorism.

There is guidance to that effect. Using digital money has transparency and accountability because of the traceable nature of the transactions. The dealer economy in which people move around with wads of cash showing off yet paying no taxes is  threatened here. This could explain why there is so much resistance against a cashless society.

People are going to pay taxes. But there is absolutely nothing wrong with encouraging people to use to plastic or digital money as long as the applications are widely available enough and the transaction costs are reasonable. This is a great policy even going into an election of this nature because it's progressive and the gains are irreversible.

What is needed at the moment are the digital instruments and the digital networks to be everywhere so that this does not become a source of exclusion and marginalisation of those in very remote areas. Mobile networks should now penetrate every habitable or economically active part of Zimbabwe. This expansion of digital infrastructural facilities is another serendipitous gain from the cash shortages. Dishonest and corrupt people are quacking in their boots knowing the digital transactions leave footprints and anything is traceable. Proverbial "brown envelopes" are facing obsolesence now. Some say they want to be allowed to make choices like other countries; well here is some news for you comrades and friends.

You cannot use cash on a London bus. You are forced to use a digital payment system, which identifies who you are and keeps track of where you have gone and what time you were there. On the train if you are to buy a ticket you will pay more; they want you to do everything digitally. We have come from a system where people were suspicious of bar codes. We may want to hold on to our old ways but here is the modest reality; this country stands to benefit if we go digital. This is what people are struggling with. Everyone who was suspected to have externalised money had an audit trail or a transactional spoor that investigators were following. There is a need to have an economy which limits the amount with which one can do cash transactions.

The issue of traceable transactions is the one that creates a tax base. There is something unusual about an economy in which citizens are richer than the State which taxes them. How mathematically feasible is that? In Zimbabwe it appears like a possibility but the only way that anomaly exists is because a lot do not pay taxes or pay wrong taxes. With virtual money this is not going to be easy. The Government has to introduce incentives to encourage digital transactions. At the moment the charges are a disincentive. There has to be something that encourages the public to opt for digital money and take pressure away from hard cash and that policy has to come from Central Government.

It's commendable that some companies have removed charges for sub-dollar transactions but more needs to be done. Our people need to purge themselves of a high cash dependence culture; at the same time the Government should make sure that the digital infrastructure is in place. The Reserve Bank has assured consumers that Point of Sale terminals will be placed in the most remote of places. So far in Zimbabwe cybersecurity does not appear to have been an issue with no widely reported attacks.

This policy might not be popular at the moment because change takes people out of their comfort zones, but in future Zimbabweans will be grateful. ED's experience in public affairs and his understanding of global complexities have taught him not to package populistic slogans as policies just to appeal to the electorate. Whatever he promises is real, pragmatic and deliverable.

Source - the herald
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