Zimbabwe suspends mobile money transactions to curb illegal forex trading
The southern African nation is battling its worst economic crisis in decades with cash shortages and rising cost of basic commodities. Its local currency, the Zimbabwean dollar (Z$) has been losing value against its benchmark the United States dollar (USD).
On the black market the Z$ is trading at 1:80 against the USD and government believes the rate is being fuelled by illegal money changers who use mobile money platforms including Econet Wireless group’s Ecocash, Netone’s One Money, Telecel’s Telecash and MyCash to trade electronic money with foreign currency.
In May, Zimbabwe’s annual inflation rate surpassed 785 %, according to the Zimbabwe Statistics Agency. In a statement on Friday, Information Ministry permanent secretary Nick Mangwana said President Emmerson Mnangagwa's administration had intervened to deal with malpractices and economic sabotage perpetuated by the “wolves in sheep skins amongst our population.”
“These measures include the suspension of all monetary transactions on phone-based mobile money platforms in order to facilitate intrusive investigations, leading to arrest and prosecution of offenders,” said Mangwana. https://twitter.com/nickmangwana/status/1276568612241891330?s=19
Mangwana said Ecocash, which controls about 94 % of mobile money transactions in the country, is acting at the center pivot of galloping black market foreign exchange rates and therefore fuelling the incessant price hikes of goods and services bedevilling the economy.
He said mobile service operators were acting as banks outside the purpose for which they were originally licensed, as non-banking financial institutions.
“This includes, in particular, the case of Ecocash, holding well in excess of Z$8 billion distributed across just over 501 000 agent and merchant lines as of June 10 2020,” said Mangwana. https://twitter.com/EcoCashZW/status/1276647067239227392?s=19
Ecocash on Saturday issued a statement urging its subscribers to “remain calm” and to continue doing lawful transactions as usual.
“We are aware of a statement purporting to ban all mobile money transactions. However, Ecocash is regulated by the Reserve Bank of Zimbabwe (RBZ) and would naturally expect a directive of that nature and significance to be communicated by RBZ,” reads part of the statement.
In May this year, Ecocash dragged RBZ to court over a directive to suspend thousands of its agent lines suspected of illegal forex trading. https://www.biztechafrica.com/article/zimbabwes-central-bank-accuses-econet-illegal-fore/15756/