The Reserve Bank of Zimbabwe (RBZ) has effectively ordered mobile money service providers to stop forthwith the cash-in, cash-out and cash back facilities on mobile money platforms, in a bid to curb rampant illicit money trading activities on the market.
The intervention comes at a time the country’s leading mobile money platform by subscription, Ecocash is being abused by enterprising money traders, setting exorbitant cash premiums as high as 60 percent in recent weeks.
The scourge has been fueling the exchanged rate escalations, thereby depreciating the Zimbabwean dollar re-introduced in February this year.
“All mobile payment system providers and merchants are hereby directed to discontinue cash-in and cash-out with immediate effect. Furthermore, all economic agents are, with immediate effect, directed to discontinue cash-back facilities. Banks, mobile payment system providers and other economic agents are reminded of the need to ensure that the entire ecosystem operate within the confines of law and enforce compliance,” RBZ deputy director for financial markets, national payment systems, Josephat Mutepfa said in a statement.
Zimbabwe has been undergoing serious cash shortages for the past few years and inroads made by mobile money platforms have mitigated the challenge.
But the mismatch between hard cash and mobile money values on the parallel market has spelt major draw backs on gains made.
‘The charging of commissions outside the approved framework adversely affects the smooth operation of payment systems and have the negative effect of distorting pricing of goods and services,” the Bank added.
Earlier this month, the Zimbabwe Anti-Corruption Commission (ZACC) raised its suspicions in the manner some Ecocash agents were conducting their operations.
It is suspected some big companies are using the Ecocash platform through various agents to fuel the run- away exchange rate.
But Ecocash has since distanced itself from wrongful acts, citing that its internal monitoring systems only go as far as monitoring mobile transactions but cannot distinguish the acts of illegal money trading from genuine transactions.
As of last week, Ecocash had suspended over 4 000 agent lines on suspicion of illicit money activities and as of this morning more merchant lines had been suspended.
However analysts have raised concern over low money supply in the market which should be atleast between 10-15 percent of broad money supply to ensure sufficient liquidity in the economy.