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Zimbabwe's Complex Relationship with Cash and Currency
In Zimbabwe, flights laden with millions of US dollars arrive at Robert Gabriel Mugabe International Airport regularly, sometimes as frequently as three times a week. Once landed, the cash is unloaded, divided into packages, and distributed across the country. This operation is carried out by Mukuru, Zimbabwe's largest mobile money transfer service. The process highlights the lengths to which companies must go to accommodate customers in one of the world's most dysfunctional economies.
Mobile Money's Growth and Zimbabwe's Unique Requirements
Africa’s mobile money sector has seen explosive growth over the last two decades, processing roughly $912 billion annually. While most fintech companies focus on digital transactions, some in Zimbabwe uniquely cater to the need for physical US dollars. The demand for hard currency is massive, driven by historical hyperinflation that wiped out the value of local savings and led to the abandonment of the national currency in 2009.
Several attempts to reintroduce a national currency have failed. Even the latest effort, a gold-backed currency known as the ZiG, has struggled to gain public trust. An estimated 80% to 85% of transactions in the country are still conducted in US dollars, largely because citizens are wary of currency depreciation and government intervention in bank-held foreign currencies.
Remittances and the Role of Mukuru
Remittances play a significant role in Zimbabwe's economy, with $823 million sent into the country within the first five months of the year. Much of the $1.9 billion in total remittances last year were channeled through Mukuru. This service is essential for Zimbabweans, especially those working in neighboring countries like South Africa, who remit funds back home.
Mukuru was founded in 2008 by two Zimbabweans in Cambridge, England, to help their families cope with skyrocketing inflation. Originally, the service sold coupons for gasoline; today, it operates mostly through an app that allows cash, debit card, or mobile money payments. In Zimbabwe, recipients can opt to receive funds digitally or as physical US dollars.
The Challenges and Adaptations of Fintechs in Africa
Africa’s fintech companies face unique challenges, such as power cuts, crime, and erratic regulatory changes. According to experts, these hardships make African fintechs highly adaptive. Mukuru and its rivals, such as Mama Money and hellopaisa, have become critical lifelines. They offer a safer alternative to informal couriers, whose services were often unreliable and even dishonest.
Government Efforts and Citizen Resistance
The Zimbabwean government aims to bolster the usage of the ZiG to exert more economic control. However, Zimbabweans remain skeptical and overwhelmingly prefer using US dollars. This skepticism is partly fueled by the government's past actions, including unexpected conversions of foreign currency deposits into local money and strict withdrawal limits.
Authorities continually grapple with citizens' reliance on the black market for US dollars. Business owners like Thembelani Ncube, who runs an upholstery business, find operating with ZiG challenging since suppliers prefer US dollars. The recurrent issues with the ZiG’s point-of-sale machines also contribute to public distrust.
As Zimbabwe's economic woes persist, the tug-of-war between government-controlled currency policies and citizens' preference for reliable, stable cash continues to define the nation's financial landscape.
