Nelson Banya (The Source)
The cashier politely waved my debit card away.
My 10 euro bill for a currywurst, pommes frites and a Coke had to be settled in cash.
Hamburg, one of Europe’s richest cities and Harare, one of the world’s poorest, have at least one thing in common — retailers here love cash and attempts to pay using cards, credit or debit, is often a frustrating exercise.
While Zimbabwe is going through its latest phase in episodic foreign currency crises punctuated by bank note shortages, Germany’s $3.5 trillion economy — Europe’s biggest — has no such ills.
Economic experts and historians often find the roots of Germany’s love for cash in the 1921-1923 hyperinflation episode when the country’s currency, the mark, crashed from 4.2 to the dollar in 1914 to 4.2 trillion by November 1923.
Close to a century after the end of the Weimar Republic, the effects of the inflation nightmare still weigh on the German psyche.
Children are raised into the cash culture, using it for the bulk of their transactions.
Recent estimates from the German central bank show that up to 80 percent of financial transactions in the country are settled in cash, almost double the rate in other advanced economies such as the US and UK.
Typically, a German moves around with the equivalent of $123 in cash, twice as much as peers in industrialised economies.
The eurozone’s biggest bank note is worth 500 euros, a concession to the Germans, whose largest bill was a 1 000 deutsche mark prior to the issuance of euro notes in 2002.
Zimbabwe, on the other hand, experienced the 21st century’s first episode of hyperinflation, which peaked at 500 billion percent in December 2008, according to IMF data.
At the time, President Robert Mugabe’s government had printed a ZW$100 trillion that could not buy a loaf of bread.
By the time the government ditched the Zimbabwe dollar in 2009, adopting a system of multiple foreign currencies — chiefly the US dollar and South Africa’s rand — the transacting public had long abandoned the currency.
At the time, local United Nations agencies were using an exchange rate of ZW$35 quadrillion (a thousand million) to one US dollar.
Although the informal dollarisation restored a small measure of confidence in the banking system, with deposits rising from about $200 million in February 2009 to $6.2 billion at the end of 2016, officials estimate that at least $3 billion is circulating outside the formal system.
This has as much to do with Zimbabwe’s highly informalised economy as it is due to two rounds of bank failures in the last 13 years, as well as the 2008 hyperinflation.
Zimbabwe’s foreign currency crisis, largely blamed on the collapse of the country’s productive base and the attendant dependence on imports, has compounded the situation and triggered a bank note shortage that has seen government actively promoting the use of electronic payment platforms.
Early this month, RBZ governor John Mangudya announced that card and electronic payments now made up 70 percent of all retail transactions.
Following my encounter with the cashier at the Wurst und Durst takeout in Hamburg’s working class Wandelhalle mall, checks with similar outlets established a German truism — geld stinkt nicht — which literally translates to ‘money does not stink,’ so there’s nothing wrong with it.
However, a dinner visit to the impressive French restaurant Cafe Paris on Rathaustrasse, also showed German business is not particularly enamoured of cards.
The eatery, with an expansive, eye watering wine list, only takes American Express cards.
Our party, which ran up a four-figure tab at the last shout, settled the bill with a combination of cash and two colleagues’ Amex cards.
A group of young diners at a table nearby, settled its bill entirely with cash.
Surveys consistently show that an overwhelming majority of Germans believe it is safe to pay with cash, which they believe allows them to keep track of transactions while keeping them out of debt.
This has not deterred government from attempting to impose restrictions, the ECB will next year eliminate the 500 euro note — believed to be a criminal and terrorist favorite — leaving the 200 euro bill as the biggest denomination.
However, the German government’s proposal to cap cash payments at 5 000 euros drew protests from the public, who got support from an unlikely source.
Central bank governor Jens Weidmann weighed in on the debate, telling the press: “It would be fatal if citizens got the impression that cash is being taken away from them.”
German taxis, however, do not seem to have a problem with card payments.
The taxi service, which typically operates using Mercedes Benz E-class estate cars and coupes, including the 2015 version currently in use by Zimbabwean cabinet ministers, accept credit cards.
Other food and clothing retailers did take card payments, including my debit VISA card issued by one of Zimbabwe’s international banks.
While there are other factors behind Germans’ affinity for physical lucre, including aversion for consumer debt and the need to assert freedom and anonymity, past financial follies do seem to play a significant role.
This factor bears similarities, and lessons, for Zimbabwe’s policy makers and the public alike.