This article highlights the contrasting approaches to digital payments in Tanzania and Zimbabwe. Tanzania has eliminated card payment fees to promote digital transactions, while Zimbabwe’s 2% IMTT has led to a decline in electronic payments. The historical context reveals Zimbabwe’s brief success in digital payments before policies stifled progress. Overall, the article underscores the importance of government policies in shaping digital payment ecosystems.
As Tanzania takes progressive steps to enhance its digital payment system by abolishing fees on card transactions, Zimbabwe continues on a regressive path with its 2% Integrated Money Transfer Tax (IMTT). This contrasting approach raises concerns about Zimbabwe’s economic policies and their impact on digital payments. Historically, Zimbabwe briefly transitioned to a cashless economy back in 2017, where electronic transactions constituted 70% of payments. However, the introduction of the IMTT in 2018 drastically reversed this progress, as the government sought to capitalize on booming electronic transactions through excessive taxation.
In contrast, Tanzania’s recent policy—led by the Bank of Tanzania—aims to stimulate digital transactions, facilitate a cash-lite economy, and aligns with the nation’s growth trajectory. The removal of transaction fees on debit, credit, and prepaid card transactions at point-of-sale (POS) terminals serves to enhance security, transparency, and convenience. Currently, nearly half (48.4%) of Tanzania’s population is engaging in digital platforms, fueled by rising smartphone penetration and greater financial inclusion. This stands in stark contrast to Zimbabwe’s dwindling embrace of electronic payments as a result of government-imposed fees.
With Zimbabwe’s governance approach characterized by taxation, the burden of the 2% IMTT coupled with additional banking fees has led to a growing preference for cash transactions. The shift towards cash can be attributed to a combination of economic strategies that prioritize short-term revenue generation over long-term digital advancement. Observers are left to ponder what might transpire if Zimbabwe were to suspend these taxes and fees similar to Tanzania’s strategy; many worry it might uncover significant challenges for banks reliant on fee income.
Ultimately, the situation delineates a crucial juncture for Zimbabwean policymakers, where current structures impede the advancement towards a digital society. As countries like Tanzania endeavor to innovate economically by fostering digital payment systems, Zimbabwe remains entrenched in cash dependency, largely due to policy frameworks that favor immediate fiscal gains rather than sustainable economic progress.
The discussion surrounding digital payment systems in Zimbabwe and Tanzania provides crucial insights into the economic implications of government policy decisions. Zimbabwe’s experience reveals a trajectory marred by strategic missteps, particularly the imposition of the IMTT, which hindered electronic transactions. In contrast, Tanzania’s proactive measures to eliminate transaction fees illustrate a commitment to fostering a cash-lite economy. The contrasting approaches underscore the significance of governmental foresight in steering financial ecosystems towards modernization.
In summary, while Tanzania’s initiative to eliminate card payment charges reflects a proactive approach to enhance digital transactions and economic growth, Zimbabwe’s continued reliance on taxation hinders progress in the digital payment landscape. The historical context of Zimbabwe’s brief digital economy, followed by setbacks due to policy changes, emphasizes the ramifications of governmental decisions on financial behavior. For Zimbabwe to transition towards a digital economy, significant reforms are necessary to dismantle the existing barriers perpetuated by current taxation policies.
Original Source: www.techzim.co.zw
