Zimbabwe’s Central Bank accuses Econet of illegal forex trading
This comes after RBZ, early this month, issued a directive to Ecocash and One Money run by Netone-the country's second biggest mobile operator-to freeze agent lines transacting over 100 000 Zimbabwean dollars (Zim $) ($1 900) per month.
Ecocash, the country's biggest mobile money operator with 11 million subscribers, complied but challenged RBZ's directive at High Court citing the move was “not only affecting people with the closed agent lines but also 53 000 of its other agents consequently affecting millions of Ecocash users who rely on the agent network.”
"There has been an increase in the demand of foreign currency by companies that are reopening and the formal exchange market has not been able to satisfy that demand for foreign exchange," Harare based economist Prosper Chitambara told Biztech Africa. "So, the users of foreign exchange have been forced to resort to the parallel market."
He said the local currency is not anchored on fundamentals thus vulnerable to further depreciation. On Tuesday, the High Court dismissed Ecocash's application saying RBZ's actions were lawful and Ecocash could not interdict on such.
“While the applicant (Ecocash) might feel passionately about the financial strain occasioned by the directive, it is not the kind of interest that can find locus standi for the applicant at law,” reads the High Court judgement.
Economist Victor Bhoroma believes Ecocash agents are simply an easy scapegoat and victim of circumstances. "Ecocash does not print money in electronic or physical form. Their channel is a conduit to transfer money already in the bank system.
Even if Ecocash agents are suspended illegal foreign currency traders will use Telecash (run by Telecel-the country's third biggest mobile operator) to trade provided electronic money is pumped into the economy at a rate that is not commensurate with economic growth," he said.
Bhoroma said the issues under spotlight were mere symptoms of shortage of reserve money creation by the central bank to fund Gold incentives and retained export credits, cash shortages, economic mismanagement and corruption.
The southern African nation's economy has been falling nosedive with power shortages, long winding fuel queues, rising cost of living and high inflation rate surpassing an annual of 800 percent in March, according to RBZ. At black market rate the local currency is trading at 1:54 against its benchmark the United States dollar while at the interbank rate it is 1:25.
The Central Bank recently printed higher denomination notes including the Zim $10 note which is already in circulation and the Zim $20 note set to circulate in early June this year, all amounting to Zim $600 million ($10 million).
Economists believe Zimbabwe's economy is going to decline further with the impact of the global pandemic Coronavirus that has infected more than 130 people and claimed the lives of four.