The move by Zimbabwe’s monetary authorities to permanently ban mobilr money agents as well as maintain a ZWL$5 000 daily limit for mobile money transactions could have the effect of increasing demand for the Zimbabwe dollar.
Last month, the Reserve Bank of Zimbabwe (RBZ) terminated mobile agents lines.
“Agents’ mobile money wallets are therefore abolished, with immediate effect.
“Agents currently holding value in suspended and frozen wallets shall be allowed to liquidate the funds to their bank accounts, upon the Financial Intelligence Unit (FIU) having satisfied itself of the legitimacy of the source of funds,” said the RBZ at the time.
The central bank also directed the country’s 3 mobile money operators (Econet Wireless, NetOne and Telecel Zimbabwe) shall to immediately close all multiple wallets, and allow just one wallet per individual.
And transactions by individuals shall be pegged at ZWL$5 000 per day.
The monetary authorities have, in recent months, been involved in a dispute with Ecocash over the misuse of the mobile money platform by foreign currency speculators.
For the first few months of this year, illegal foreign currency trading had a devastating effect on the local unit.
But the introduction of the foreign currency auction system has curbed that depreciation. And the latest move to end mobile money agents and limit daily transactions to ZWL$5 000 could have the effect of boosting demand of Zimbabwe dollar notes.
As at the end of 2019, mobile money accounted for around 84.8% of all transaction volumes and about 22.6% of value.
Zimbabwe is currently using a dual currency system (ZWL & US dollar), but use of the latter has been constrained by the fact that most Zimbabweans earn their salaries in the local currency. Additionally, the shortage of small denomination notes and coins have also limited use of the greenback.
The termination of mobile agent lines could result in decreased usage of mobile money.
All things being equal, mobile money agents are typically responsible for converting physical cash to digital value, and performing crucial tasks such as on-boarding, supporting and educating millions of customers on a daily basis.
Although they represent the face of mobile money services around the world, local mobile money agents have been complicit in speculation on the local currency.
The ZWL$5 000 limit also means that mobile money users can only use a maximum of US$60 a day, which is rather too low to purchase huge ticket items.
This means people will be forced to resort to other modes of payments, particularly cash or bank electronic transfers (Zipit).
With Econet Wireless’ Ecocash platform being the dominant mobile money platform, observers say the company will be the hardest hit by the mobile money agents ban.
Meanwhile, the authorities are anticipating that the mobile agents ban could curb “money laundering” in the country.
Earlier in July, Zimbabwe’s police obtained and carried out a court warrant of search and seizure of some financial records and subscription database of mobile telecommunications firm Econet Wireless.
The company, which is the country’s largest mobile phone network provider, is accused of money laundering through its mobile money platform – Ecocash.
An affidavit signed by investigations officer, Detective Inspector and Officer-in-Charge of the Criminal Investigations’ Asset Unit Mkhululi Nyoni reads that the company allegedly used several individuals between January and June this year to engage in buying and selling hard cash.