Why Do Zimbabweans Prefer Mobile Money Over Traditional Banking?

Why Do Zimbabweans Prefer Mobile Money Over Traditional Banking
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Negosentro.com | Why Do Zimbabweans Prefer Mobile Money Over Traditional Banking? | Zimbabwe, a landlocked country in Africa, is popularly known for its troublesome history and complex landscape. It has pretty diverse wildlife, most of which are in national parks, reserves, and safari areas.

But when we talk about this diversified country, life in Zimbabwe has never been easy. Since its independence, the southern African country has seen factional violence, international sanctions, and rampant political instability. However, what became worse for the country, was the mid-2000s, when it lost something much more fundamental, which is its currency!

Waking early at 2 in the morning and standing for hours in queues, in front of banks just to withdraw as minimal as one to two dollars, which were the maximum their government allowed to withdraw, became part of their day to day activity. Not only that, sometimes their hours of standing in these queues became futile, as the banks ran out of cash, pretty frequently.

Though the impacts are bad, these devastating economic crises brought hope in launching Africa’s financial technology revolution. The circumstances made Zimbabweans prefer mobile money over traditional banking.

Zimbabweans got an app called Ecocash, which enabled them to save time and effort by providing online transaction facilities. Ecocash tariffs were so affordable that all the Zimbabweans started using it. But what are the major reasons behind switching from traditional banking to mobile banking? Let’s find out!

The top 3 reasons why mobile money is preferred in Zimbabwe:

  1. Hyperinflation: THE TROUBLESOME HISTORY

Unfortunately, very few will ever get to see the rich diversity of Zimbabwe and the wonders it holds. This is because, in addition to being blessed with natural beauty, Zimbabwe is also cursed with an abundance of gold, platinum, coal, and diamonds.

Which led to the British South African company invading the land at the end of the 19th century.

The company-run territory was almost entirely exploited and governed by the tiny white minority. However, in 1980 Zimbabwe gained its independence after years of national struggle, and then at that time, its national party won its first election.

Almost immediately, while the feeling of nationalism was strong, leader Robert Mugabe did what all good dictators do, CONSOLIDATION OF POWER! His army started murdering descendants and did all that an authoritarian government would do for the next 37 years, teamed with corruption.

This thrust for power has more than political consequences. In the 2000s, his government started seizing land from white farmers and started redistributing it. Conventionally, it was all done in the name of coping up for the unjust done during the colonial period.

The effects were devastating!

These new farmers usually had little or no interest, and usually no knowledge in agriculture. From 2000 to 2009, the total agricultural output was cut in half. Thus, Zimbabwe produced only 10% of what it did before.

By wiping out it’s two largest crops, tobacco and corn, land reform single-handedly destroyed the country’s economy and disseminated its food supply. As farms became less productive and food supply got limited, thus did the demand for the little produced increased, and so did the prices.

The daily inflation reaches 98%, and Zimbabwe’s economy totally collapsed!

In 2007, Zimbabwe experienced the second-highest inflation in history, after post-war Hungary.

Nevertheless, it is difficult to know exactly how bad it got, as the government stopped recording numbers after 100,000 percent inflation. This was the time when a loaf of bread would cost 30 billion Zimbabwean dollars.

Employees stopped going to work when their annual salary couldn’t even meet or pay for their bus ride home. Vending machines were put out of service, as they couldn’t hold the billions of dollars that a single can of soda would cost, and shops if they were opened, increased prices number of times a day!

To keep up, the central bank kept on printing bigger and bigger banknotes, which is the biggest NO, in order to slow inflation. A million dollars, a hundred billion dollars, and this didn’t stop there. They even printed as big as a one hundred trillion dollar bill, which was worth a full 40 US cents.

But how did Zimbabwe get here? How did their condition get this bad?

This leads to the second reason!

  1. SOCIAL FEAR: Lost of faith on banks after circulation

The loss of faith is one of the biggest reasons why traditional banking isn’t successful in Zimbabwe. After going through a turmoil like they did, it became highly skeptical for people to have trust and faith in banks.

One of the biggest reasons was low circulation and inflation that was increasing at a high rate.

The reserve bank kept printing new higher denominations, but it just couldn’t keep up. The banks spent 500 thousand US dollars a week, ordering new banknotes, which by the time they arrived from Germany, were already worthless.

Twice it redenominated, removing 10 zeroes from all banknotes in 2008 and 12 in 2009, but to no avail.

Zimbabweans didn’t believe that their currency had value, and therefore it didn’t. In other words, the prices rose as the Zimbabweans expected them to. And soon, no more money was left. There weren’t enough bills to go around.

Any economy requires money to circulate, but due to the loss in faith as with each day the value of their money decreased, people didn’t trust the banks. All this led to the banking system collapse and the reduction in the tax as well.

Like much of Africa, the majority of its population was unbanked. Here, the number of transactions was high, but the balances are low, branch locations and ATMs just weren’t profitable. They also lacked the infrastructure to keep money safe or transfer it between people.

Not only did it hide the flow of money, granting cover to criminals and making it impossible for the government to regulate it and the taxes, but was also physically dangerous.


This was the time when Zimbabwe got creative. In advanced economies, 92% of the population has some kind of bank account, but that number was just 20% in Sub Saharan Africa, leaving Zimbabwe with 6.5 ATMs per 100,000 people, compared to the United States, where this number is 174.

Many who lived in cities usually sent money to their families, by taking a day or two trip themselves or assigning someone this task along with the risk of getting it stolen.

But while this lack of banks only slowed the continent’s technological progress, African entrepreneurs turned this into an advantage.

What the people did have a lot were the PHONES!

In many of the African countries, the total mobile penetration stands at 80%. These things helped countries like Zimbabwe to leapfrog over cheques and credit cards and surpass the more advanced economies in terms of mobile payments.

The ubiquity of banks and credit cards hinders new technologies. Tapping or texting would make transactions much easier.

In Africa, it was either take a 2-day bus ride or use technology that was just one click away. But this needed a similar app and hit a large mass of people.

In Zimbabwe, this preferred app is called Ecocash, which in 2007 had 6.7 million users compared to its 2 million bank accounts. That year the reserve bank reported that the digital payments accounted for 90% of its 97.5 billion dollar transactions, making its economy virtually cashless.

Every user was associated with a sim card, allowing them to text anyone money. There wasn’t any charge to sign up, and the prices were minimal. But what was truly revolutionary is that it doesn’t require a bank account. There are numerous middlemen that work for you. It is so simple and convenient that it was used for almost everything like paying school fees, water, electricity bills, food, and so on.


Lifting a nation from poverty is difficult, not because of a lack of resources, but the solutions require deep political changes. To rebuild its economy, Zimbabwe has to manage inflation and to do that, it has to build confidence. To carry all that the government requires reforms. This hope came in 2007 when Mugabe was dep used after nearly 4 decades of ruin.

Zimbabwe clearly showed how the very same problems can be an ingredient for the necessary innovation. For people of Zimbabwe, mobile money was not only convenient, but for the world without a bank account, its life-changing!

Making transactions faster and more secure, apps, and companies like Ecocash literally increase money value. Theft is reduced, there is less waiting in lines, and the job becomes much quicker, credit is more accessible to entrepreneurs, increases savings, and also improves accountability.

African countries like Zimbabwe are today a leader in mobile money, especially because they have to come a long way, which led to their financial revolution.

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