Zimbabwe’s digital economy

Categories: Tech News

By: Marios Constantinou / Created: Friday March 5, 2021

Zimbabwe’s digital economy

It is no news to anyone that Zimbabwe has a money problem. From the late 90s until 2009, the Zimbabwe dollar reached a state of hyperinflation, which reached its peak in 2008 at 11,200,000%. This episode became infamous for the printing of notes with huge numerical values, such as the 100 trillion Zimbabwe dollars note.

In order to try to solve this problem, in 2009 the Zimbabwe government abolished the Zimbabwe dollar and announced that multiple foreign currencies would take its place in the country, including the US dollar, the British pound, the euro, the South African rand, and the Botswana pula.

However, the crisis had taken its toll, and loss of faith in financial institutions led people to hoard cash instead of storing their money in bank accounts, and the economic crisis strongly damaged their economy, leading to more imports than exports, along with other problems. Read more articles: Cloud Engineer

As a result, it didn’t take long for cash to dry out in the country. The government tried to counteract that by issuing bond notes linked to the US dollar, but it also went short. And in time, inflation started to return.

So, how could they deal with this shortage of cash? By going cashless.


Having no cash is different from having no money. Financial insecurity and economic instability, along with the use of the more stable US dollar, led people to hoard cash, that is, physically store their money, when having the option.

However, banks don’t really keep all of the money they store in cash format, especially when it is in a foreign currency. As people desperately tried to take their money off banks, the reserves drained. So now it is very difficult to get cash, but many people still keep money in their balance in bank accounts, and some even in foreign banks, while others store the cash they have in their houses and in safes.

As such, there isn’t a lot of cash circulating, and electronic payment became the dominant form of payment, both by bank cards and mobile phones.

The app EcoCash became the main payment service, used by individuals and companies alike. But not without its disadvantages: there are many tariffs involved in using money with it. As a result, it is common to see places using different prices for different methods of payment, with US dollar cash still being the favored option.

Does it work?

Zimbabwe is definitely not the best example of how a cashless society could work. The transition to mostly digital payments was very quick and violent, a result of a years-long economic crisis which still isn’t over. It does, however, show that it can work, and can work virtually anywhere.

Of course, Zimbabwe is not the only country that is going cashless. Sweden, for example, has been rapidly transitioning to fully cashless transactions during the last few years, and has now been relying mostly on the app Swish, the result of a cooperation between major Swedish banks and the Central Bank of Sweden. A much more orderly transition.

In Sweden, however, what is preventing them from becoming fully cashless is that cash is still available. Older people, especially the ones from rural regions of the country, are more resistant to the change, especially if they aren’t used to smartphones, and as such still prefer to use cash.

Also, being a government-backed project really helps the transition process. Zimbabweans do not have a lot of choice regarding the method of payment: it is either EcoCash, which is the most requested method, bank cards, or foreign cash. And all of them have really high drawbacks: high tariffs, insecurity, and scarcity.

Even if other similar fintechs were to appear, it would have to face the lack of economic security in the country, a steep competition with EcoCash, and difficulty getting people to adopt it, considering the low confidence in this sector of the economy.

Still, it had one fortunate, surprising side-effect: using less cash means there is one less form of transmitting the COVID-19 during the pandemic. Not to say the country isn’t struggling with it, considering its economic crisis, but it could possibly have been much worse otherwise.