The recent launch of the Zimbabwean service by Internet payment giant Paypal could provide new economic opportunities for local consumers and businesses. But it could create short term risks unless it quickly expands to allow Zimbabwean businesses to receive payments using the service.
Innovative businesses can use the expansion of Paypal to partner with overseas companies, and tariffs on goods bought online could be lowered to incentivise broader trade links.
Paypal enables Zimbabwean businesses and consumers to purchase goods and services from 203 countries around the world, ranging from the US to France to Taiwan, using mobile phones. Since Paypal has 148 million users, including many online retailers and services companies, this means that the opportunity for global consumption from within our borders has changed momentously.
Consumers benefit
Zimbabweans’ purchasing power has dramatically increased due to Paypal’s new service, as the transaction fees associated with buying goods and services from millions of SMEs abroad has declined. Products ranging from the thousands of products sold by Internet giant Ebay, to ‘Mom & Pop’ e-commerce stores, are now all available to the local consumer.
The potential economic benefits are difficult to overstate. It means that the world has opened up for the consumer. Zimbabwean retailer prices now face enormous pressure to adjust to the increased competition.
The move signals that Zimbabwe is open for business. Paypal reduces the risks of doing businesses for small and medium enterprises (SMEs) by providing buyer and seller protection on transactions. While Paypal only allows Zimbabweans to purchase from abroad at present, the launch sends out the message that Zimbabwe is open for business to the millions of SMEs using Paypal around the world.
Growth in Internet transactions between Zimbabweans and overseas companies could provide the signal that the economy is open to trade, investment and growth. Even if the short-term cost is an increase in imports, the local consumer’s purchasing power will have significantly increased, and there are opportunities for innovative partnerships between our exporters and overseas companies.
Overseas companies that trade with Zimbabwe provide the potential for marketing Zimbabwe as a trade destination in overseas media. For example, a US electronics company in Cleveland, Ohio could provide opportunities for Zimbabwean companies in non-competing industries to offer joint press releases in Cleveland’s local newspapers. An incentive for such partnerships could be provided by lowering trade tariffs for overseas companies that offer local exporters marketing opportunities in their local media.
Long term growth
As and when Paypal expands its services to include payments to Zimbabwean merchants, our high literacy rate and mobile telecommunications infrastructure could lead to a significant boost in ICT-related sectors such as Business Process Outsourcing (BPO), an estimated $304 billion dollar market worldwide (HfS Research, 2013).
For example, a Zimbabwean entrepreneur would be able to set up a micro customer service business using Paypal payments, a Skype account, email, and serve customers from India to South Africa to the US on behalf of small businesses worldwide, with less than $1000 in capital.
Compared to tangible exports such as wood and furniture, the low setup costs and rapid cash flows of BPO operations make them an accessible business to thousands of Zimbabweans, if the payments, distribution network and risk-reduction infrastructure of companies such as Paypal are in place. –
Nyasha Madavo is founder of AfricaDLAB.com, http://www.africadlab.com
He can be contacted at nyashamadavo@yahoo.co.uk
Post published in: News