“If you want to change your money via Ecocash, I will send you directly. I will be using my mobile number,” says a money changer seated at Machipisa Shopping Centre. “I could have used the agent line but RBZ closed that channel.”
Adaptive money changers have come up with ways to circumvent the recent ban of mobile money agents.
Initially the ban was temporary but some parallel market forex dealers had found loopholes to which they could buy and sell money.
The recent disbandment of agent lines by Reserve Bank of Zimbabwe came as a huge blow with confusion among the transacting public being the order of the day.
Serving as banks with the ‘cash in’ and ‘cash out’ methods which acted as bank withdrawals and deposits, mobile money agents contributed to financial inclusion of the populace.
In 2011, Econet Wireless Zimbabwe launched its financial technology company named Ecocash which was in 2019 placed under the purview of Cassava SmartTech. This was the first mobile money company in the country offering banking solutions on each and every mobile phone. This mobile money platform later became a payment solution as well later on to be considered a pseudocurrency.
As Zimbabwe’s economy took a downturn, monetary authorities claimed mobile money agents were responsible for the rising inflation and local currency depreciation.
The Reserve Bank of Zimbabwe (RBZ) through its Financial Intelligence Unit (FIU) in May established that most mobile money agent accounts were being abused and used as a conduit for illegal transactions that distort the foreign currency market.
The recent RBZ directive suspended and froze EcoCash accounts and NetOne One Money accounts of agents with a monthly transactional threshold of $100 000 after transactions totalling $75 million were recorded.
Today Ecocash announced its decision to comply with the RBZ directive. ZIMBABWE’S mobile money giant, Econet,abolished mobile money agents and reduced to a maximum of $5000 per day all individual EcoCash transactions in compliance with a directive from the Reserve Bank of Zimbabwe (RBZ).
In a statement, Econet said it has been directed by the monetary authority to implement the measures including reducing EcoCash line to one client while merchants and billers will continue to accept EcoCash payments from customers.
“Please be advised that we have received a directive from the Reserve Bank of Zimbabwe to the following effect:
Transactions by individuals shall be pegged at a maximum of $5 000 per day with immediate effect. This threshold relates to all transactions by the individual, including payments to merchants for goods and services and payments for bills; send money and purchase of airtime and data; EcoCash debit card, and wallet to bank transfers,” it said.
In a recent Monetary policy statement the RBZ Governor Dr John Mangudya announced the current measures to suffocate the black market forex business.
“ Agent wallets are no longer serving any legitimate purpose and were now being used primarily for illegal foreign exchange transactions. Agents’ mobile money wallets are therefore abolished, with immediate effect,” he said.
Yet affected are not only money changers posing as Ecocash agents but traders as well. Small to Medium Enterprises were also impacted. Over 53 000 Ecocash agents are on the mobile money platform.
“You know when decisions like these are made they are likely to affect us the most even though we didn’t deal in forex,” said a shop attendant.
Efforts to get comment from
GSMA states that as the uptake of mobile money services continues to grow, the expansion and evolution of the agent network becomes all the more critical to ensuring a high quality of service.
Mobile money providers have therefore focused both on growing their distribution network and supporting agents with dedicated education and training. Indeed, the number of agent outlets more than doubled over the past five years, reaching 6.6 million in 2018, as revealed in this year’s State of the Industry Report on Mobile Money1. The proportion of agents active on a 30-day basis also increased during the same period, reaching 55 per cent.
The presence of mobile money agents in rural and hard-to-reach areas has been instrumental to increasing financial inclusion in many markets. According to the 2017 Global Findex, 22 per cent of adults without a formal financial account cited physical distance to a financial institution as a barrier. A comparison of the increase in mobile money agent density against brick-and-mortar banking shows the impact of agents in this regard. In 2018, agent network density indeed reached an average of 148 active mobile money agents per 1,000 sq km – more than twice the 2014 figure. The density of commercial bank branches across the same markets has not substantially changed over the 2014-2018 period, averaging 14 per 1,000 sq km.