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EcoCash ignores govt ban amid

by Staff reporter
28 Jun 2020 at 08:17hrs | Views
ECOCASH has continued offering its services despite a shock government ban on mobile money services on Friday.

The government said it had suspended all mobile money services as it battles against the illicit trade in foreign currency, but Ecocash said it was business as usual since it had not received a directive from the Reserve Bank of Zimbabwe (RBZ) to stop its operations.

"Ecocash is regulated by the Reserve Bank of Zimbabwe and would naturally expect a directive of that nature and significance to be communicated by the Reserve Bank of Zimbabwe," Ecocash said in a statement.

The government also suspended trade on the Zimbabwe Stock Exchange, claiming it had intelligence those targeted were "either deliberately or inadvertently, in illicit activities that are sabotaging the economy".

President Emmerson Mnangagwa's government is battling to stop the rapid collapse of the local currency that was only reintroduced last year.

The Zimbabwe dollar is now pegged at US$1:$100 on the parallel market and US$1: $57 at the official rate.

The move by the government came hardly two days after Mnangagwa told mourners at the burial of national hero Stanley nleya

Ecocash agents remain on suspension, but individuals are allowed to transact that his government would soon come hard on alleged economic saboteurs.

Government's drastic measures were, however, criticised as irrational and ill-thought-out.

Samuel Wadzai, the Vendors Initiative for Social and Economic Transformation director, said informal traders would be the hardest hit by the ban.

"That is nonsense and we dismiss such reckless action," Wadzai said.

"Even if they have a genuine reason, it should be a process where people are consulted and everyone understands the basis of such a ban. It is unacceptable and it kills business.

"Today people are refusing to take Ecocash payments, how do you then transact? It is not fair."

The Zimbabwe Coalition of Debt and Development described the ban as shocking and questioned its legality.

Fadzai Mahere, the MDC Alliance spokesperson, said Information permanent secretary nick Mangwana had no authority to pronounce a ban on mobile money services.

"Indeed we expect statements of such gravity on economic matters to come from competent authorities that are mandated by law to manage monetary policy," Mahere said.

"Their silence indicates dissonance with in the regime which points to dysfunctionality  which has characterised state operations in recent months."

She said the ban would impact on the day-to-day lives of ordinary people already hard hit by severe cash crisis, food shortages and hyperinflation.

"We are also concerned at the impact of this arbitrary measure on investment in the country," Mahere said.

"The country already has a negative image among foreign investors.

"Shutting down the ZSE arbitrarily not only affects the economy to others on the market, but violates property rights."

Even retailers said the move by the government was confusing in so many ways, hence there was need for clarity.

Confederation of Zimbabwe Retailers president Denford Mutashu questioned the intentions behind the ban.

"We need sanity to prevail and the amount of unproductive money or manufactured money that has been flying across various of these platforms certainly may have caused such a decision to be taken and I think in reopening, we will have to look at how much of the money that passes through these platforms is productive and it is in line with trying to arrest the rampaging exchange rate that has been piling pressure on general pricing in the economy," Mutashu said.

"The parallel market has become de facto number one enemy in the country and has been driving inflation apart from policy inconsistencies.

"It also then requires a bit of balance because we know that from these platforms you can simply pick the numbers that have been driving the volumes of transactions and we can simply close those other than closing the whole nation.

"It is just like bank accounts. You can go to any bank and they will be able to give us track of accounts that will be fuelling that.

"For example, if an account is pushing in a million dollars, you red-flag it and immediate action is taken. But there has been on going silence from authorities, the central bank and banks. Why they have been quiet, nobody knows."

Former Confederation of Zimbabwe Industries president Sifelani Jabangwe said the ban would backfire.

"The concern is that 94% of transactions are on mobile transactions and there is no hard cash," Jabangwe said.

"What it means is that it makes things difficult for the transacting public to carry out any business. We don't see how this will work.

"They may have their concerns, but there are a lot of things that need to be considered considering how Ecocash has 94% transacting via its platform and they include the rural communities, workers and many others.

"How are they going to do it now? How are people going to buy goods and services?

"That is really a concern now and it will be like closing business.

"They may have concerns, but the way it has been done is just to close business immediately. "We are saying 94% of people who transact are on Ecocash, service stations among other businesses are to lose such a huge percentage." Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo said the move by the government was "disastrous" at a time the country was battling cash shortages

"They are adverse implications," Moyo said.

"Remember it is the government that promoted these mobile money platforms.

"The majority of workers are using this transaction, probably 99% of transactions in this country, as you are aware there isn't enough cash in circulation so that's the mode of transaction being used by the majority of people and if it is true that the government has decided to ban these platforms, we are not sure if they have put in place alternatives. If not, it can only spell disaster.

"If it is true, it's a disaster for many.

"We are aware of the challenges that have been bought by these mobile platforms, just imagine someone who has been working for a month, gets his hundred dollar salary and someone standing at a corner in a neighbourhood decides to give that person $60 cash, imagine.

"It is bad, but you need then to proffer alternatives. It is actually the government that encouraged us to use Ecocash and other mobile platforms.

"They told us not to look for money, not to worry about anything and we followed that only for them to come up with this," he said.

"They told us we were supposed to be a cashless economy and what they tell us of the position, we will ask them what's next?"

Political analyst Eldred Masunungure said: "It is a desperate realisation that the measures they have been taking since the introduction of the bond coins, bond notes, the Zimdollar in the form of RTGS and lately the forex auction system have not been working. They have also realised that each time they try to instil discipline, financial chaos erupts as has been happening in the last few days.

"It is a desperate move to a desperate situation by a government that has run out of clues to deal with the black market and meanwhile the economy is running wild."

He said people were yet to hear of measures to counter the collateral damage and minimise the impact.

"The consequences will deepen the poverty and the misery and the hardships of the ordinary man and woman. This is all part of the symptoms of a bigger problem that may not lie in economics, but in politics. The sustainable way of dealing with this monster is not an economic one or a monetary one but a political one. That is where the issue should start from," Masunungure said.

He said the decline in the economy was accelerating and prospects for "political and economic eruption" was nigh.

One of Mnangagwa's advisors, Shingi Munyeza, said the ban was akin to "breaking the mirror because of an unpleasant image".

Source - The Standard