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Govt suspends EcoCash, 3 other platforms

by Staff reporter
27 Jun 2020 at 17:03hrs | Views
GOVERNMENT has, with immediate effect, suspended all monetary transactions on mobile money platforms "to deal with malpractices, criminality and economic sabotage perpetuated by the wolves in sheep skins amongst our population" fuelling parallel market rates.

In a statement last night, Information permanent secretary Ndavaningi Mangwana said the tough measures, which will render thousands of mobile money transfer agents irrelevant, were meant "to facilitate intrusive investigations, leading to the arrest and prosecution of offenders".

The drastic action came as government is struggling to keep pace with the ever-rising foreign currency parallel market rate, which has caused the local currency to continue losing value against major currencies.

As of yesterday, the parallel rate hovered around US$1:$100, a far cry from the central bank rate of US$1: $57.

The official exchange rate, according to monetary authorities, was determined by market forces under the foreign currency auction system launched by the central bank on Tuesday.

"These measures are to subsist until such time that the mobile money platforms have been reformed to their original purpose and all the current phantom rates of exchange have converged into one genuine rate," Mangwana's statement read.

He said details of the envisaged measures would soon be announced by monetary authorities.

Government claimed it had unearthed "impeccable intelligence which constitutes a prima facie case whereby the phone-based mobile money systems in Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy."

Mangwana said all the four mobile money platforms EcoCash, One Money, Telecash and MyCash were involved in "these illicit activities in various degrees".

Government cited EcoCash as the main culprit.

"EcoCash, however, which controls nearly 94% of all mobile money transactions, is the centre pivot of this system and its resultant impact on Zimbabwe's economy," Mangwana said.

In October last year and early May this year, government clamped down and ordered Econet to shut down over 54 000 EcoCash mobile money platform agents' lines, claiming that its agents were aiding illegal transactions and fuelling the parallel market rate.

Mangwana listed some of the alleged irregularities as externalisation of foreign currency through transfer mispricing, acting as banks and in the case of EcoCash holding in excess of $8 billion, fraudulently creating and issuing non-attributable and non-auditable agent cellphone accounts, hiding irreconcilable accounts in suspense accounts with huge credit balances for "unjustifiably long periods", working in cahoots with criminal syndicates, acting as conduits for the circulation of counterfeit US dollar notes and non-enforcement of know-yourcustomer guidelines.

Government also accused EcoCash of "criminally" allowing agent lines that were banned by the central bank to continue trading illegally.

It also said some mobile money transfer operators were engaging in rampant unchecked tax evasion, failing to report suspicious transactions or taking action against them, creating illegal transient and permanent money through airtime loans as well as unaccounted wallet-to-bank and bank-to-wallet transactions, among many others.

"The impact is exacerbated by the existence of fake counters on the Zimbabwe Stock Exchange, which are epitomised by the so-called Old Mutual Implied Rate. This, in turn, results in four or more US:ZWL parallel market exchange rates operating in the market," he said.

Source - newsday

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