Zimbabwe previously thrived in digital payments but regressed due to the 2% IMTT introduced in 2018, causing a shift back to cash transactions. Conversely, Tanzania has eliminated charges on card payments to promote digital use, aiming for a cash-lite economy. This disparity underscores the influence of government policy on economic trends in both countries.
Zimbabwe, once at the forefront of electronic payment systems, has seen a regressive trend due to the imposition of a 2% Integrated Money Transfer Tax (IMTT) in 2018. Initially, Zimbabwe enjoyed a cashless revolution in 2017, where electronic transactions constituted 70% of all payments. However, after the introduction of IMTT, the preference for cash transactions escalated, leading to a decline in digital payment adoption.
In contrast, Tanzania is making strides by eliminating charges on card payments to boost digital transactions. The Bank of Tanzania’s initiative aims to foster a cash-lite economy, allowing greater accessibility and security in financial exchanges. This proactive measure is intended to align with the country’s economic growth and enhance the convenience of digital payments, with 48.4% of the Tanzanian population currently utilizing such platforms.
The stark difference between the two countries underscores how government policies can significantly influence payment trends. While Zimbabwe struggles with a cash-centric economy exacerbated by tax burdens on electronic transactions, Tanzania adopts incentives to cultivate digital growth. The question arises: would the scrapping of similar charges in Zimbabwe reverse its cash recession or adversely impact banks reliant on transaction fees? Sadly, until substantial policy changes occur, the trend toward cash in Zimbabwe will likely persist.
Zimbabe’s struggle with adopting digital payments contrasts sharply with Tanzania’s current initiatives to foster a cash-lite economy. Previously, Zimbabwe was lauded for its shift to digital payments, effectively harnessing technology to improve financial transactions. However, in 2018, the introduction of the IMTT thwarted that progress, as the government’s insatiable desire for tax revenue redirected consumer preference back to cash. Meanwhile, Tanzania’s recent elimination of transaction charges reflects a growing recognition of the need for policies that nurture digital economic environments, promoting convenience and financial security in an increasingly digital world.
The contrasting trajectories of Zimbabwe and Tanzania highlight the critical impact of government policy on the evolution of payment systems. Zimbabwe’s heavy taxation on digital transactions has driven consumers back to cash, undermining prior successes. In contrast, Tanzania’s approach to eliminate card payment charges signals a commitment to fostering greater digital adoption. As both nations navigate their economic futures, the effectiveness of their respective strategies in encouraging innovative payment solutions will be pivotal.
Original Source: www.techzim.co.zw
