Cashless Society…Sounds Great So Long as the Cashless Infrastructure is Running | US Asset Boom Has Not Been as Kind to All

WSJ – In Zimbabwe, Promise of Mobile Money Fades When the Power Goes Out – Bernard Mpofu and Gabriele Steinhauser 9/1/19

More than most other places in the world, this southern African nation with a long history of monetary dysfunction has staked its financial system on mobile money, which allows funds to change hands through the touch of a few buttons on an old-school cellphone or through a smartphone app.

But now, amid power cuts lasting for up to 17 hours a day, EcoCash breaks down frequently. The outages are blocking everyday economic activity and exacerbating a financial crisis that has left Zimbabwe’s government bankrupt and some five million people, about a third of its population, in need of food aid.

Eight out of 10 transactions in Zimbabwe—from buying milk to filling up a car or settling a utility bill—are done via cellphones, almost exclusively on EcoCash.

“We are more or less a cashless economy,” said Ashok Chakravarti, an economist based in Harare who believes that the EcoCash outages will hurt Zimbabwe’s gross domestic product, which the International Monetary Fund expects to shrink by 5.2% this year.

A government austerity program and limits on issuing T-bills haven’t stopped the new Zimbabwean dollar from losing value. Inflation spiked to 176% in June. Last month, the finance minister announced Zimbabwe’s statistics agency would stop publishing annual inflation data until February, saying it was distorted by the reintroduction of a local currency.

WSJ – Historic Asset Boom Passes by Half of Families – David Harrison, graphics by Danny Dougherty and Maureen Linke 8/30/19

Advertisements

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.