How our cash economy is hurting small businesses and you

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Today, I wanted to load airtime on my phone. So I went to the store next door and asked the lady whom I’ll call Mama Frank to get me airtime for 10K UgShs. When I pulled out a 20,000 Shilling note, I was immediately told I couldn’t get the airtime. Why? Turns out she didn’t have change.

That’s how transactions are lost in Uganda.

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This isn’t the first time am encountering such scenarios where a vendor dismisses me or denies me a product or service on the grounds that they “don’t have change”. I’ve heard some other people have similar experiences.

Now imagine how much money small businesses lose just because someone shows up with a “big” note and they “don’t have change” to give back the customer’s balance. It’s a lot of money, that would otherwise be earned by small business owners.

While big business owners cheat on their customers

It’s not just small business owners who own mid-size shops, but also big super markets. I often get shocked when the cashiers tells me they don’t have 100 UgShs to return to me again because “they don’t have change”. This time,it’s not the super market losing business, rather, it’s me losing money and the super markets cheating on me. Well, for a heavy single shopper, 100 UgShs may not mean much. But suppose they’re 1,000 other such cases where the super market withholds 100 UgShs on grounds that “they don’t have change”, that’s 100,000 UgShs. See, now am sure you’re raising your eyebrows.

But the real loser is you and me

When I failed to get airtime from Mama Frank’s shop next door, I had to move another 1 Km to find someone who both had airtime and change to return to me! That costed me time and energy that I would have invested in doing something a lot more productive. On the other hand, if I sat down to calculate cumulatively how much money I’ve lost to a merchant just because at that time I thought it was small compared to the inconvenience I  would go through to wait for it, it would approximately be 5,000UgShs/month which is 60,000UgShs/year — as a single individual.

So what next?

As a technologist, am absolutely disturbed when I see recurring problems in our society when there are solutions for them. Why should Mama Frank continue to lose business and fail to take her children to school simply because she doesn’t have loose cash around to give to her customers as change?

What if Mama Frank had a means of allowing some sort of electronic payments and i also had a means of paying her the exact amount for her goods/services without the need for change? I know, you are already thinking mobile money! Wrong. Up to now, neither the banks nor the Telecoms have working systems with merchants like Mama Frank to enable seamless electronic transactions at the merchants’ points of sale.  For instance last week, TechPost Enterprise Technology editor, Bright Onapito reviewed Orange’s Mobile money service to which he said;

Other than the promise of a more reliable and secure mobile money service, Orange money brings absolutely nothing new to the mobile money industry and we found no differentiating killer feature just yet. The platform is still “closed” and tightly controlled by the carrier just like all other platforms giving no chance for third party providers like say payment aggregators to use or extent the benefits of the system.

And that’s absolutely true! I’ve read countless articles praising how Mobile Money has revolutionized banking and commerce in Africa, but when I walk down the street and try to make some transactions, I just don’t see this kind of hype yet. There are no eco-systems that can enable successful models implemented by multi-billion dollar companies like eBay, Amazon here in Africa. We don’t have electronic payment aggregators like Visa to complete the processing between merchants and buyers. As such, Mama Frank will continue to lose business while my “smart” cheats at the super market continue to take advantage or me — but this needs to stop now.

Image: foreignpolicyblogs.com

  • In Kenya supermarkets offer sweets as a way of getting change.The Central Bank Of Kenya did warn them and went further to have a coin week to get them into circulation.Actually the problem locally has been solved by City Oil but then again how many are they in the country and how many people go there or are near one.