Mobile money discounting and currency abandonment : livelihoods and monetary practices in rural Binga, Zimbabwe

Abstract

The convergence of money with technology is dominated by the drive to eradicate cash by digitization, this is legitimised by arguments that digital forms of money will promote financial inclusion and, in the process, alleviate poverty in developing countries. However, the positive societal benefits attributed to digital money are increasingly being contradicted by empirical evidence from developing countries. The emerging contestation of digitization of money as a tool for poverty alleviation creates an opportunity to reconceptualise monetary innovations for people living in poverty. Thus, in this thesis I answered the following question; what new insights can monetary practices of rural households and persons reveal about money and monetary innovations (or needs) of the low-income group? To answer this question, I draw on the SLA and infrastructure concept not only to examine monetary practices of households and persons in Binga, a rural district of Zimbabwe with a colonial and postcolonial history of economic and political marginalization, but also to evaluate the technical and or functional properties of the money which they use. My research revealed a number of interrelated phenomena, the most important of which is currency abandonment phenomena. It takes two forms, namely, outright refusal to use and adopt a currency and or by discounting (price inflation of goods and services mediated in the currency that is being abandoned). Pertinent examples include; (1) mobile money discounting (this is due to excessive mobile money transaction fees), (2) financial disintermediation, in which users of both mobile and bank money deliberately made their financial affairs opaque by rejecting digital money in preference for cash and commodity money. There are historical antecedents for what I call currency abandonment, these include; (1) the black Friday (holders of capital devalued the Zimbabwe dollar by dumping it on the stock and money market after the Zimbabwe government paid out ex-combatant’s gratuities from money that it did not have, (2) the catalytic role of households in dollarization, which is the rejection (by ordinary users) of the inflationary Zimbabwe dollar in preference for foreign currency. These activities were a means by ordinary users to resist the fact that digitization is experienced as a form of exploitation, in particular rent seeking and indiscriminate identity harvesting (monetization of personal identity) by both the government and mobile network operators. The most relevant research and policy theme which emerged from this study is the economic exclusion problem, in turn, the most important solution to economic exclusion was found to be sharing and redistribution, exemplified by provisioning of public infrastructures, Zimbabwe government elderly and disabilities cash grant, mulala cattle (livestock sharing), poor to poor mobile remittances and rotational saving scheme in which interest rates were not a reward for risk, but shared by all members as a reward for cooperation and collaboration. This study concludes by proposing a locally informed sociotechnical framework of monetary innovations for people living in poverty. The framework divides monetary needs into secondary and primary needs, the former consists of the Public Authority Deficit, which emphasises the need to address the subjugated position of developing countries in defining and addressing monetary needs of the unbanked-poor and the Quantitative Deficit (mutually exclusive relationship between the role of money as a medium of exchange and store of value) while the latter is represented by the Qualitative Deficit (failure of notes and coins to combine the unit of account role of money with the identity of transacting parties). The framework presented here relegates digital money to a secondary need (or innovation) which is inconsequential to poverty alleviation, but necessary only in facilitating remote payments.