Much of the discussion about the introduction of the polymer $100 bill conflates the evil of ‘dark’ money with persons who have been shut out of the banking system. The persons who deal in ‘dark” money have self-selected to operate outside the system but there are those who are unable to use our banks and credit unions. It has been estimated that such persons may account for a quarter or more of our population.
The danger posed by both are significant to our economy, but the self-selected ones attract our attention while the excluded remain invisible. Tales of ‘rich” poor people, like our fabled barber, enthral while the larger problems are ignored.
To fix the problem of ‘dark’ money requires strong institutional arrangements. We apparently favour tax amnesties instead of the strengthening of the Board of Inland Revenue and the Financial Intelligence Unit. The size of the intake from the amnesties marks a huge failure. Are we truly interested in shrinking the underground economy?
We need to connect the dots between unpaid taxes, our weak institutions and the quality of our public infrastructure- health and schools and roads. The inconsistent application of rules by public officials encourage corruption which increases the unofficial economy. The insistence by Government offices on using cash perpetuates the problem.
The elephant in the room is the unbanked and underbanked among us. The unbanked has no connection with the banking system, while the underbanked may have an account but use pawnshops, money lenders and remittance services-all high cost alternatives-for their financial needs.
Much of this cost will be avoided with a bank or credit union account. It is a myth that these persons cannot save since sou-sous are our heritage. Financial education is another myth that disenfranchises many, even as they long for it. The problem is that the banks fail miserably at helping the short-term requirements of fast and convenient access to their cash.
Unexpected expenses and emergencies represent a major challenge for this group.
Our goal should be to bring people out of poverty and a bank or credit union account is a vital step in that direction since it allows savings to take place. ‘Income feeds your stomach…you act differently when you have assets…when you are living from pay check to pay check, you just think about how you are making the next day’ (Oliver and Shapiro, 1995). But banking halls are intimidating places burdened with perceptions of prejudice.
The fees can cost more than can be afforded, funds processing time is longer than desired. Slow customer service and branch closures levy a huge cost on those who cannot run away from their jobs.
Technological advances should seek to include our poor. If we were to adopt the electronic banking model of the Standard Bank of South Africa, in which the ‘branches’ are in grocery stores and shopping centres with the use of a card possessing a memory chip that stores personal information, including fingerprints and which allows for direct deposits from employers, what would happen to our economy?
‘It is time to open the doors of opportunity to all of God’s children’ (Martin Luther King, 1963).