The Government of Zimbabwe has suspended EcoCash, mobile money and the Zimbabwe Stock Exchange, citing criminal activities in a bid tame the volatile US Dollar exchange rates in the Zimbabwe economy.
EcoCash however, which controls nearly 94% of all mobile money transactions in Zimbabwe, and the center pivot of the problem, has defied the order and continues to urge people to transact.
Dear Valued Customer,
— EcoCash Zimbabwe (@EcoCashZW) June 26, 2020
According to the government, the country’s mobile money systems and the Zimbabwe Stock Exchange have been colluding to perform illicit activities that were sabotaging the economy.
Both the Permanent Secretary of Information Ministry, Nick Mangwana, and the Reserve Bank of Zimbabwe have put out a statement suspending all mobile money activities for the said reasons.
Press Statement on the Suspension of Monetary Transactions on Phone Based Mobile Money Platforms pic.twitter.com/8FlJ4Lfqww
— Reserve Bank of Zimbabwe (@ReserveBankZIM) June 27, 2020
The government has listed the following irregularities and illegalities by EcoCash and mobile money platforms in Zimbabwe:
- Illegal externalization of foreign currency through transfer mispricing
- Acting as banks outside the purpose for which they were originally licensed, as non-banking financial institutions
- Fraudulently creating and issuing non-attributable and non-auditable agent cellphone lines accounts
- Hiding irreconcilable accounts in suspense accounts which hold huge credit balances for unjustifiably long periods
- Conspiring with big merchants to act as their conduit through which they transfer hundreds of millions of dollars per day to runners on the streets who then buy US dollars on their behalf
- Rampant, often arrogant, non-compliance with directives issued by the Reserve Bank of Zimbabwe and the Financial Intelligence Unit
- Facilitating illicit trade in notes and coins, at contrived rates of between 30% and 50%, thus causing artificial shortages of the same within the banking system
- Criminally allowing agent lines that were banned by the RBZ to continue trading illegally
- Ssing bulk airtime sales at discounted prices which are cross rated to phantom USD exchange rates which further distort the Zimbabwe market and deliberately mop up US Dollars from the black market
- The existence of fake counters on the Zimbabwe Stock Exchange which are epitomised by the so-called Old Mutual implied Rate (OMIR)
- Multiple contrived phantom exchange rates in use in the Zimbabwe Economy which conspires to defeat fiscal policy
Mangwana went on to point the blame on EcoCash saying:
Ecocash in particular, is acting as the centre pivot of the galloping black market foreign exchange rate and therefore, fueling the incessant price hikes of goods and services that are bedevilling the economy and causing untold hardship to the people of Zimbabwe.”
The secretary went on to say the impact has been compounded by the existence of fake counters on the Zimbabwe Stock Exchange which results in four or more US:ZWL parallel multiple contrived phantom exchange rates operating in the market which conspires to defeat fiscal policy.
“At any time, therefore there is the official rate, an Ecocash rate, OneMoney rate and the OMIR among others.” ~ PS Mwangwana
On the other hand, the demand for bitcoin has skyrocketed, with some sources claiming bitcoin is now selling at at 18% premium above the market rate.
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