Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya has said Econet Wireless must work hand in glove with the central bank to foster market discipline among the telecom operator’s errant EcoCash mobile money agents in order to stem out widespread misconduct.
Dr Mangudya made the call for united efforts to resolve the problem, especially with Econet, in an interview with The Herald Finance and Business yesterday after the central bank ordered the suspension of all cash-in and cash-out transactions earlier this week on the back of serious market indiscipline.
He, however, stressed the point that the central bank still regarded the disciplined role of the mobile money agents, as an integral part of the Government’s policy and goals towards financial inclusion and a cash-light society.
EcoCash agents for cash-in and cash-out transactions have been widely blamed for charging extortionate premiums upwards of 60 percent for cash-out transactions, taking advantage of the acute cash shortage in the country. This has seriously eroded the value of mobile money in Zimbabwe, reducing them to a fraction of their real worth.
Zimbabwe, which recently scrapped a US dollar dominated multi-currency regime in June this year and reintroduced its domestic unit, started widely using EcoCash around 2011 as cash shortages were just beginning to set in, with Econet instantly taking the lead given its extensive subscriber base of over 10 million users.
However, Econet Wireless subsidiary, Cassava Smartech, which administers the EcoCash mobile money system, yesterday filed an urgent High Court application seeking to have the directive by the Reserve Bank set aside in the interim until full court determination of the legality of the apex bank’s directive is made.
“We are seriously seized with the EcoCash matter to see what the best way forward is. But of course, it’s not about the platform; it is about the people who are abusing the platform.
“Econet should help us monitor and control the conduct of this segment of the financial services market because for Econet, this is their road (platform) and some roads need humps, others have traffic lights while others have detours; Econet must help us because this is their road.
“Econet must play a part, given that for instance, if you exceed the regulated speed on a highway, you risk being slapped with fines for flouting road rules and regulations; these are issues of governance and Econet needs to help foster discipline on their platform among its agents,” he said.
“What has happened (suspending cash-in and cash-out) should be a wakeup call for everyone; we need a united front from everyone to deal with the problem. We must say let’s cease fire, stop fighting or blaming each other, but let’s re-establish the rules of engagement,” Dr Mangudya added.
The RBZ chief said the need to foster financial inclusion remained paramount, given that mobile financial services had gone a long way in bringing into the bracket millions of previously unbanked and financially excluded people.
Dr Mangudya said the central bank was already working on increasing the amount of cash in circulation, currently at about $700 million against a demand of about $1,5 billion-$2 billion, in line with global average of requirement 10-15 percent of total money supply.
The central bank chief said to avoid the potential adverse effects of sudden increase of money supply through cash injections, the RBZ would stick by its monetary policy pronouncement that the cash injection will be gradual.
While Econet has taken the central bank to the High Court, where it has filed the urgent chamber application seeking an interim order for the suspension of the bank’s Monday directive pending determination of its legality.
Delivering the State of the Nation address yesterday, President Mnangagwa said the Government was determined to consolidate digital financial services, which were contributing to creation of financial inclusion by way of delivering banking services to the previously marginalised citizens.
Since the inception of EcoCash services in September 2011, cash-in transactions worth about US$10 billion and ZW$7 billion have been processed through the platform, making it country’s largest mobile payment platform.
On the other hand, cash-out transactions worth nearly US$8,7 billion and ZW$4,1 billion have been conducted.