[Dave Birch] A surprising story in the national press here in the UK alerted me to an interesting phenomenon.

Gangs of Eastern Europeans are stealing chewing gum from supermarkets to use back home as currency. The likes of Wrigleys Extra and Airwaves are being stolen in bulk before taking it home where it has a tangible value as currency – particularly in Romania where it often given as change in shops.

[From Eastern European gangs ‘steal chewing gum to use as currency in Romania’ | Mail Online]

A reliable correspondent tells me that this also true in Zimbabwe. There are no coins in circulation, so small-scale retail trade is conducted in $1 bills. These bills circulate to the extent that they are barely recognisable. Now, for the wealthy, this doesn’t matter. If you buy a bottle of scotch and get a pack of chewing gum in change, you don’t really care. But if you are living on $1 per day, then the absence of change is a real problem. It’s the big problem of small change that may be the source of monetary innovation. This is precisely what happened in England at the beginning of the 19th century.

In his excellent book “The Birmingham Button Makers”, Professor George Selgin explains how the British economy faced that same problem during the industrial revolution.

[From Digital Money: What is cash actually for?]

What happened in that case was that there was money for the wealthy (bank notes and gold and silver coins) but there was no money for the masses. You couldn’t by a loaf of bread or pint of beer with the banknote or a silver coin, so private industry stepped in to mint copper token money, and this money circulated particularly in industrial centres in order to (very successfully) facilitate wage payments and retail spending. It looks as if private industry is going to have a go in Zimbabwe to. There are several mobile money schemes there, with many banks connecting to the “ZimSwitch” mobile banking platform.

It is Econet, however, that might have the greatest advantage in the mobile money market. As the country’s leading mobile operator, Econet’s customer base makes up more than 60 percent of the mobile phone market, in addition to possessing extensive infrastructure.

[From Mobile Money Arrives in Zimbabwe | audiencescapes]

There is now a new smart card scheme there as well, which is great. I’m a firm believer in letting competition help to consumer.

Smartpayment Solutions (Smartpay), in conjunction with South Africa’s NET1, will on the 22nd of this month kick off a pilot project of Net1’s Universal Electronic Payment System (UEPS) in Chitungwiza

[From Bulawayo24 NEWS | Zim moves to cashless society as US$3 million deal yields fruit]

They are planning to use a multi-purse smart card scheme for a wide variety of primarily payment-related banking services.

Services offered via the smart card will range from wage payments, pension payments, social grant payments, cash deposits, cash withdrawals, wage payments, balance inquiries (directly from the card), transaction lists (directly from the card), deposit without card, wallet to wallet transfers (from primary to savings and vice versa), money transfers between smart cards, bank accounts and un-banked people, third party bill payments to registered, linked and once-off merchants, amongst others.

[From Bulawayo24 NEWS | Zim moves to cashless society as US$3 million deal yields fruit]

This is actually the same system that is used by the Ghanaian banks, and it uses fingerprint biometrics for authentication so that it can be used to provide tolerably secure access to money in a mass market with limited literacy (although to be honest I think a lot of perfectly literate people would go for fingerprint biometrics simply as a convenience, irrespective of security.

The use of e-zwich money transfer recorded a significant growth in 2010 ending the year with total transfers valued at GH¢ 24.5 million. This represents a growth of 713 per cent over the 2009 figure of three million Ghana cedis.

[From E-zwich money transfer grows by over 700 per cent in 2010 | Business News 2011-10-01]

It is interesting note that, in comparison, mobile money seems to have a slow start in Ghana.

With 6 live branchless banking deployments involving 12 banks, 3 Mobile Network Operators, 2 start-ups and a government entity, the race is on in Ghana to reach the unbanked with branchless banking services. Ghana has 15 million adults and a majority of the population living on less than $2 a day, making it significantly smaller and poorer than the other countries featured in this series. It is a unique market with a regulatory focus on interoperability and interesting dynamics in the bank-MNO partnerships.

[From Ghana: Aiming for interoperability in branchless banking]

As this CGAP note points out, this makes Ghana a fascinating case study in the co-evolution of card and mobile cash replacement.

Airtel is already in partnership with leading international and regional banks including Zenith Bank, United Bank of Africa, Ecobank, Standard Chartered Bank and other corporate institutions notably Databank, DSTV and Gesroto to provide customers with more convenient ways of paying bills, contributing to investments, making deposits and withdrawals. Other banks and service providers including GT Bank, UT Bank, Unibank, Electricity Company of Ghana (ECG), Marxmart, Koala and Melcom are in the process of piloting the Airtel Money service. There are also more than one thousand three hundred (1300) Airtel Money dealers, and over hundred (100) branches of partners banks ensuring the widest availability of Airtel Money throughout Ghana.


I wonder if Zimbabwe’s experience might be different? For one thing, there isn’t an even slightly satisfactory cash alternative to the new technology and for another thing the market share of the leading mobile player might be able to drive adoption in a feedback loop much like M-PESA. It’s definitely going to be one to watch to help us to understand the dynamics around mobile money adoption in competitive markets.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

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