Businesses were already struggling with effects of the deadly coronavirus pandemic, coupled with high production costs, high taxes, low disposable incomes and foreign currency shortages, among other things.
The Reserve Bank of Zimbabwe (RBZ), which is struggling to contain Zimbabwe's burgeoning foreign currency parallel market, this week directed mobile money operators, dominated by EcoCash, to limit daily transactions, cancel agent lines and curtail bulk payments.
Zimbabwe National Chamber of Commerce's newly-appointed president Tinashe Manzungu said the Central Bank's decision to continue restricting mobile money transaction limits was negatively affecting the country's ease of doing business and hurting small businesses and the marginalised.
"Most people in Zimbabwe prefer to use mobile money, which is fast and convenient compared to the traditional banking system," he said, adding that one of the main reasons for the large unbanked population in Zimbabwe is geographical inaccessibility and poor infrastructure, with many of the unbanked population living in remote rural areas.
"This, combined with a lack of financial education, creates very high barriers to banking for the rural populations and for the farming communities outside towns. Mobile money has afforded the marginalised, the rural and the small-holder farming communities the chance to be integrated into the country's formal financial system and be able to contribute to the country's fiscus through various taxes and levies," he added.
Manzungu also noted that the limits on mobile money transactions could result in either higher demand for Zimbabwe dollar bank notes or near-total dollarisation of the economy as retailers prefer to receive the forex directly, rather than get electronic Zimdollars which have limited use due to the limits.
"Increased demand for Zimdollar cash notes will impact the already existing premium on cash notes, whilst near 100% dollarisation implies an accelerated depreciation of the Zimdollar as it becomes less and less preferable. It's a move that will force retailers to charge for goods in foreign currency, which will be unfair to most people who are still getting paid in local currency," he said.
Retailers' Association of Zimbabwe president Themba Ndebele also weighed in, saying while the latest measures by the RBZ will not effectively collapse business, it will certainly affect operations and cashflows in the short-term.
"There will be disruptions in the market since a lot of people were used to EcoCash and will be forced to migrate to the formal banking system," he said.
A survey of small to medium enterprises (SMEs) showed that only 14% of - most of them in the informal sector - are banked.
Japhet Moyo, the Zimbabwe Congress of Trade Unions (ZCTU) secretary general, said it was critical for the government to come up with measures to support SMEs at a time several large companies were struggling to remain viable, with some having adopted a cocktail of measures to remain afloat, including retrenchments and sending workers on unpaid leave.
"The fire-fighting mechanism by the Reserve Bank, which is not even sustainable, will hit growth of the SMEs, the majority of whom cannot afford to use the formal banking system that is expensive for their payrolls and procurement of materials," he said.
According to the International Monetary Fund (IMF), Zimbabwe has the second largest informal economy as a percentage of its total economy in the world after Bolivia.
The IMF noted that activities of the informal economies were hidden from authorities for various reasons, which include regulatory, monetary and institutional. Monetary reasons include avoiding paying taxes and all social security contributions while regulatory reasons include avoiding governmental bureaucracy or the burden of regulation.
Moyo also criticised the monetary authorities for key policy contradictions and called for wider consultations with various stakeholders before implementing economic policies.
"Not long ago the central bank was bragging about the country swiftly becoming a cashless society, but now they are forcing people to revert to using cash. How does one limit the use of mobile money platforms without providing the alternatives?
"Mobile money platforms came into effect because of cash shortages and now they are restricting them without providing the cash. The central bank should have consulted widely with various stakeholders to find ways of dealing with those who were abusing the facility instead of resorting to a wholesale blanket ban," he added.
Zimbabwe is currently seeking to unlock economic opportunities, especially for women and youth through the delivery of a wide range of financial services at affordable costs to the majority of the population.
However, experts say, the latest decision by the apex bank will ensure that the majority of people remain financially excluded. This stems from the fact that banks have played second fiddle to mobile money, which has tapped into the previously unbanked market. The financial institutions are also accused of neglecting the unbanked by failing to come up with products that cater for the lower segments of the market.
On Monday, EcoCash said merchants and billers will continue to accept payments from customers but will be required to liquidate the funds in their wallets to their bank accounts only.
Bulk payers have also been affected by the RBZ directive, which limits their scope of operation.
"The Reserve Bank of Zimbabwe shall only approve the use of bulk payer lines for the purposes of disbursing low-value payments, such as disbursements for humanitarian aid (and) payments related to agricultural activities," EcoCash said in a statement.
The Central Bank also directed that with immediate effect, no individual shall be allowed to operate more than one mobile money line.
"This is yet another knee jerk reaction and inconsistent policy directive from RBZ, that doesn't help formal businesses let alone the SMEs sector. At the moment, businesses are already grappling with depressed demand made worse by the limited daily trading hours," businessman Shepherd Kembo said.
"Instead of having to deal with such depressed business volumes, shops will now have to further deal with bottlenecks and constraints to do with ZW$5 000 a day payments system. With rising inflation, the ZW$5 000 limit is not enough to pay for essentials like internet, electricity let alone raw materials," he added.
