Mobile money and POS transactions way down as Zimbabweans unofficially dollarise

Leonard Sengere Avatar
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Economies run on trade. Of course, if we looked hard enough we could find one self-sufficient man somewhere but most of us have to trade what we have for what we need. Money, especially paper and electronic money makes this all easier.

The beauty of it is that we have a record of how much money there is in the economy and how much people are trading with each other.

The money supply is the total amount of money in the economy and it’s growth is, or more correctly, should be tied to growth in the economy.

It’s common sense really. If we are producing the same amount of goods then the same amount of money should be enough. A growth in money supply not supported by a growth in economic activity is how high inflation is begotten.

Zimbabwe’s money supply (M3) was ZW$36.3 billion in January 2020 and it had ballooned to ZW$1.1 trillion by June 2022. That’s a 3000% increase. Can we say there was a corresponding 3000% increase in economic activity to warrant this? I don’t think so.

The question is, did the increase in prices necessitate a growth in money supply or did a growth in money supply lead to price increases? What we know is that a lot of dollars chasing few goods leads to demand pull inflation.


Talking about demand-pull inflation, turns out the Zimdollar has a very high velocity. This means the number of times money moves between different people in an economy. High velocities are usually associated with booming economies, usually in the developed world.

In Zimbabwe, this high velocity of 7:1 comes from people looking to discard the Zimdollar as fast as possible. Most of us can’t help but receive some ZW$ at some point and we rush to convert to USD or to buy groceries before inflation does its thing.

So, this velocity is contributing to the inflation problem by inducing demand. Demand for USD which led us to the current exchange rates and demand for goods that led us to current prices.

We are transacting less

Most of the ZW$1.1 trillion in circulation exists as zeroes and ones on the RBZ’s computers. A tiny fraction of it is in cash form.

The weird thing is that as the money supply increased the number of times we transact went down. You would expect that with increased velocity and a 3000% increase in the money supply the number of transactions would increase but you’d be wrong.

RTGS transaction volumes have not been increasing. Where we did around 242,838 in a week in January 2020, we were doing around 228,497 in July 2022. A 6% drop.

Now these RTGS transactions are responsible for 87% of transaction values. This is where the big money moves are made but it’s mostly corporates making RTGS payments.

It’s not just RTGS volumes that are down, POS volumes are down 45% and mobile money is down 41% in the same period. ATM volumes are the only ones up in that time period but ATM transactions are just people withdrawing from banks so they can purchase USD and are only responsible for 1.22% of transaction values.

We, the regular citizens don’t use RTGS that often, if not cash, we use swipe at point of sale terminals or mobile money. It is then curious to see those two channels’ usage fall by 45% and 41% respectively.

This points to cash usage

Like we talked about above, economies run on trade. We see the number of transactions going down and yet we know people still trade, they still send each other money.

We can chalk down the drop in volumes to people having less to spend and so transacting less. That’s definitely a factor.

The low transaction limits placed on mobile money transactions also saw people not use mobile money as much. We can’t ignore that too. If not mobile money what are people using now?

I think what’s happened is that people have moved on to cash transactions. We know that remittances in are at an all-time high. They reached US$1.4 billion last year and that’s not counting the funds that don’t come in via legit channels.

The foreign currency is there in the market. It’s just that it is hard to track just how much is in circulation. The government makes its job harder by introducing further disadvantages to using official channels when using USD. The 4% tax on USD transfers being a huge deterrent.

As a result, all trade in USD happens in the shadows, off the books, never to be fully appreciated.

I recently tried converting US$1 to ZWD in town and was surprised to find most turned me away. They did not have any ZW$, there is a shortage of the stuff in the market. However, people are getting by using their USD just fine.

I know that’s just an anecdote but I think it shows what’s on the ground.


We can ignore this all we want but Zimbabwe really is re-dollarising by the day. The longer we ignore this the longer we have to wait for policies that will work. I’m not here to argue whether or not dollarisation is a good thing. I’m saying it’s already happening and as a country we have to respond accordingly.

Those in business, especially the informal kind, will tell you that they are struggling to collect payments. Dealing in cash necessitates a physical meet up and that’s not convenient for anyone.

You may have noticed how e-commerce players all now have a cash on delivery option. It has it’s challenges but it’s going to have to work.

Instead of pretending the markets have not dollarised we should be tweaking our policies to enable business to thrive.

That’s just me though. If you have thoughts on this do let us know in the comments below.

Also read:

Mangudya says not enough USD in Zim to redollarise, Biti says that’s nonsense. On closer inspection, they agree.

“There’s absolutely no need to rush to spend the Zimdollar,” says Zim govt. 40% interest on deposits good enough

Govt doubling down on what many believe caused the Zimdollar to collapse last year


What’s your take?

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  1. Anonymous

    We are doomed. We are gonna dollarise again, wait 2½yrs and have cash shortage, inflation booms again and back to square one. Citizens refuse to accept government policies for short-lived benefits, not even a new government will be able to solve that.

  2. Desmond Derera

    A great article and well researched @Leonard Sengere I must say! Very enlightening & refreshing. Continue publishing these type of articles in the future….

    1. R Sango

      What a comprehensive article leonard.Thanks for the anaysis,it really has unvailed some deep issues which are not always at our disposition.

  3. Biden

    Zim economy is now 70 % informal so its hard to get a, proper picture, last, year, we got more forex formally than Zambia but the kwacha is stable so ours is a trust and perception issue

    1. Wait

      That is a shallow analysis. The Zimbabwe government is tirelessly printing money to pay its way. Is that the case in Zimbabwe. How can Zim dollar be stable if it being undermined by the Zim govt

      1. Me2

        Zambia vs Zimbabwe inflation?

  4. Jack

    The government has been clearly saying they are controlling the quantity of RTGS available to manage the parallel market rate.

    GOVERNMENT procurement and service providers – who include public works contractors and suppliers of goods and services – are destabilising the foreign exchange market by offloading part of their staggering monthly payments fuelling spiralling inflation, various official and market sources say. Public procurement is central to government service delivery. – Bulawayo24

    The market isn’t moving on its own. Mthuli’s hidden hand is at play.

  5. 20

    I’m not there’s enough data to make a reliable conclusion…. Maybe offices have gone so much that a single transaction coursing ppl balances for the month

  6. The True Sage

    Your analysis is fatally flawed. Excess ZWL$ that was supplying the black market and pushing transactions is no longer there. Gold coins, hello! Also with removal of Auction rate price discovery role, legally compliant organisations can charge market rates for both currencies so reducing need to change money on the black market. Businesses have to change their model to dual currency systems and no longer be pegged in ZWL$ or USD. But if Government maintains discipline, you will soon see preference for ZWL$ increasing. Go into Harare CBD right now. A number of small operators are holding onto the local currency notes and refusing to give ZWL$ cash change. That is not a sign of re-dollarising. Biti is a bombastic imbecile who plays to a gallery of minds that fail to question why he left Treasury broke if he was such a brilliant economist.

    1. Tonderai

      Time tells… doesn’t it? It shall tell that you are wrong.

    2. Katsa

      Your reasoning is fatally flawed.
      Gold coins have a neutral effect on money supply and inflation.
      There still is a lot of Zim$ and prices are going up. Bread is now $859.
      The auction is still King. The Willing buyer willing seller rate is controlled through demand caps(companies are limited to a capped once weekly transaction).

      Government can not maintain discipline. Wheat farmers will soon start delivering to GMB, Summer crops need funding, elections are a few months away. Government still has to pay contractors that delivered goods and services. Govt is in debt.

      Inflationary pressures are still high

      The ‘discipline’ is just for a short while.

  7. Anonymous

    Why can’t we just dollarise officially

  8. Imi Vanhu Musadaro

    These folks ruined the economy so that they could “save” it, just before elections. Some Zimbos are forgetful, they will start singing praises.

  9. General

    As long as there’s fewer lines of credit, no balance of payment support, no meaning FDI , Then dollarise , dedollarise is the cycle unless the gvt cut their budget drastically and send Zanu pf to its grave

  10. Godden Phiri

    Its now trying to make sense on other way round but somewhere somehow our economy is going down because look now our own currency is not moving in the market, yeah but unfortunately its a good idea to cause the rate to stabilize but we can not do business without mobile money

  11. Lieutenant

    It pains me when I see people struggling to patch up symptoms of a system that has been compromised for too long.It complicates a subject that is otherwise simple and understood well.Any debate to do with Zim financial & economic crisis has to start with both domestic and international politics not the subject of economics and banking that we understand very well.I can say much but for the time being we just in a vicious cycle as noted by General, No Stability insight yet…. There’s no business development being done in Zim ,we just traders just to get by…..