Zimbabwe has been forced by economic conditions into a nearly cashless economy, and its experience shows some of the struggles that could come with a cashless economy, The New York Times reports.
But Zimbabwe is hurtling toward a plastic future for a simple reason: It is running out of cash, specifically the American dollars it adopted in 2009 before abandoning its own troubled currency. Anxious about their nation’s political and economic troubles, many Zimbabweans have been hoarding dollars or taking them out of the country. Banks have slashed daily withdrawal limits. A.T.M.s now sit empty.
The article describes how Zimbabwe citizens have been forced into electronic payments for everything from shopping to church tithes. Zimbabweans have been hoarding cash after the country’s currency depreciated to the point that it switched to U.S. dollars. They are trying to protect value stored in cash. Some people have turned to mobile payments, but the barter system has become the payments tool of choice for many individuals and small businesses.
In Nyamuzuwe, a village where there is no electricity and cellphone coverage is very spotty, the cash shortage had ground business to a halt.
Residents no longer sold vegetables by the roadside because passing drivers lacked cash. Ezra Mbigu, the owner of a solar panel who used to charge customers 50 cents to recharge their cellphones, now reluctantly accepted a cup of beans instead. Villagers traded two pounds of sugar for a bucket of corn, or livestock for basic items.
The experience of Zimbabwe shows some of the friction that people would face in any society that would go cashless. Even though more developed nations might have better infrastructure for noncash payments, there would be times when electronic payments would not be optimal. At those times, the barter system would likely make a comeback, though that option might be more difficult in nations that are further removed from bartering.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
Read the full story here
