By Chimpele Kelvin Tsamwa
On 11 March 2020, when The World Health Organization (WHO) declared the novel coronavirus (COVID-19) outbreak a global pandemic, a lot of countries moved to be coronavirus prepared.
This disease has changed how we mourn, how we travel, pray, socialize (at least for some of us anyway), and how we do business. Almost every aspect of our daily lives has been affected either directly or indirectly.
Coronavirus is primarily spread through respiratory droplets and contact and one way of protecting oneself is by limiting your movements and avoiding coming into contact with contaminated surfaces. These social distancing rules and the general restrictions on physical movement have seen an increase in the demand for digital payment systems.
One of the measures proposed by the Government of Malawi (GoM) to mitigate the spread of the virus is the use of digital payments. It’s quite simple: the less you come into physical contact with others and the less you handle cash when paying bills, sending/ receiving money, and purchasing goods/ services the less exposed you are.
The GoM classified banks and payment service providers as essential services providers to enable us to access payment vehicles and tools and decrease any possible infection through the handling of cash. Airtel Money Malawi Limited and Telekom Networks Malawi (TNM) Mpamba Limited reduced and waived some mobile money transaction fees. Commercial banks also reduced some online and mobile banking fees for 3 months.
Airtel Money also increased the daily transaction limit and the limit subscribers can hold in their wallet and some commercial banks also increased the daily mobile and online banking transaction limits. And Airtel went on farther to reduce reduced cash-out (withdrawal) fees effective today 28th August 2020.
All these were and continue to be implemented to encourage the nation to embrace digital and online payments to limit in-person transactions and ensure that more people can afford to transact remotely. Similar policy changes to encourage the adoption of digital finance have been made across Africa and the rest of the world.
A lot of Malawians (at least those I interact with) have now gotten used to transacting on the phone. They now buy electricity/ water units on the phone, pay their DSTV, and MASM subscriptions online and when they go into Sana Megastore or Chipiku they opt for cashless payments. We have had these options for years but I think it’s only now that they are almost a reflex. How I wish this was extended to paying minibus fares, tithe, wages, buying fruits and vegetables at Lizulu Market, and paying for fuel at a service station. Not to say that this is impossible at the moment but I think it would be better if it were the norm. A man can dream, right?
Covid-19 aside, cash is just filthy (yes – the thing most people would kill and die for is nasty) and we would be better off limiting the number of times we handle it. Paper money can keep a lot of germs from all the surfaces it comes into contact with – whether that’s a cashier’s hands, a chef’s apron, an auto teller machine, or the floor at your friend’s third engagement ceremony. Cash gets around and can remain in circulation for a lot of years.
Let’s think ahead.
It’s quite evident that this pandemic has accelerated the (global) shift towards digital and cashless transactions. Time has never been riper than now for governments to look into central bank digital currencies (CBDC) – the digital form of fiat money.
The concept of CBDCs was proposed little over a decade ago but the coronavirus pandemic has forced countries to take this more seriously in 2020. According to the Bank for International Settlements (BIS), 80% of worldwide central banks were involved in CBDC-related research as of January 2020.
Brazil’s central bank established a team in August 2020 tasked with investigating CBDC issuance, security risks, economic implications, and societal benefits against the country’s existing payments landscape.
Likewise in Sweden, The Netherlands, the United States of America, and The Bahamas, central banks are ramping up their digital currency research. And after launching trials of the digital Renminbi in a few cities in May 2020, China is poised to become the first country in the world to launch a digital sovereign currency.
Germany’s Giesecke & Devrient, the second-largest money printer in the world, invested in blockchain technology in July 2020. This comes after the company introduced software called Filia that enables central banks to issue digital versions of their currency last year and it was recently reported that G & D is already in talks with several central bank clients on the possibility of using Filia to create their own CBDC.
Imagine if you could send money to your uncle in Ntchenachena and he buys goods and pays bills on a mobile platform without having to worry about losing a portion as transaction fees. We would potentially say bye to all those hidden banking fees some of us have been ‘crying’ about at the same time enhancing financial inclusion in the country. A digital Malawi Kwacha would make this dream a reality. On the other hand, a CBDC would make GoM save taxpayers money by reducing the costs of printing money as demand for cash would inevitably decrease.
Hate it or love it, and whether we are ready or not – digital currencies are here to stay. The coronavirus pandemic is a game-changer for and will have a lasting influence on, digital finance. It’s up to us to not be left behind as our trading partners plan for the future. And, the future is now.
Author Bio: Chimpele Kelvin Tsamwa works for www.green-thingz.com as the Master of