Mobile money transfers and point of sale transactions in the Zimbabwe dollar are plummeting as usage of US dollars for transactions solidifies. According to EcoCash Holdings, this is driving up US dollar revenues for mobile money and Fintech companies in the southern African country. It also reflects on the increased side-lining of the Zimbabwean dollar as a unit of exchange.

EcoCash, the biggest mobile money operator in Zimbabwe, is now positioning its business, which also includes insuretech and digital banking, to benefit from this.

“In the quarter under review, we have focused on growing the mobile money United States dollar transactions distribution footprint across the country,” Charmaine Daniels, company secretary for EcoCash said in a November quarter trading update for the company.

EcoCash is anticipating increased uptake of US dollar wallets and their usage for transfers to gather pace.

The EcoCash mobile money platform also allows for receipt of remittances from abroad through partnerships with traditional money transfer firms as well as through its own remittance channels.

“We expect this trend to continue as we drive to digitise the United States Dollar cash economy which has continued to grow,” the company said.

The company expects the reduction of Intermediated Money Transfer Tax on domestic money transfer transactions from 4% to 2%, effective 1 January 2023, to accelerate the adoption of US dollar digital money transfer services.

However, as usage of US dollar transactions has gathered pace, there has also been a ‘drop in the volume of our local currency mobile money transactions, the company said.

Under the banking division, “Point of Sale transaction volumes dropped by 27% confirming the increase in United States Dollar cash transactions” in the Zimbabwean economy.

Annual inflation in Zimbabwe has remained elevated at 229.8% for January 2023, despite slowing from 243.8% in December, according to data released by Zimstats. Telecommunications companies in Zimbabwe have also moved in to peg their prices in US dollars.

The statistics agency calculated the blended rate of inflation – which encompasses prices in Zimbabwe and US dollars – at 101.5% for the month of January, reflecting the quick pace of dollarisation in the economy