The Government of Zimbabwe has suspended mobile money transactions in the country over allegations of criminal activity. The government will also suspend trading at the Zimbabwe Stock Exchange, arguing that the two services collude to generate “phantom” exchange rates that sabotage the economy.
According to a press statement from Nick Mangwana, the country’s Secretary for Information, the suspension will pave the way for investigation and arrest of offenders.
The press statement reveals that Ecocash, Telecash, OneMoney, and Mycash run parallel market exchange rates at the Zimbabwe Stock Exchange, beside the official, which undermines the fiscal policy.
Further, players like Ecocash face allegations of fueling black market foreign exchange rates, which causes price hikes. Mangwana says that Ecocash works with merchants and runners who buy “hundreds of millions of dollars per day.”
Other illicit activities by mobile money platforms include:
- Using bulk airtime sales at discounted prices cross rated to phantom USD exchange rates, which distorts the Zimbabwe market
- Stealing money from subscribers through un-auditable mobile phone lines
- Illegal externalization of foreign currency through transfer mispricing
- Fraudulently creating and issuing non-auditable accounts to agents
- Driving illicit trade of notes and coins, therefore creating artificial shortages
Mangwana says the measures “will subsist until such a time that the mobile money platforms reform to their original purpose and current phantom rates converge to one rate.” Meanwhile, the government will announce measures to protect the public from collateral damage arising from the suspension.
In response, mobile money giant Ecocash said that the directive to ban mobile money can only come from the Reserve Bank of Zimbabwe, the regulator. Therefore, the giant urged customers to stay calm and wait for adequate notice.
Zimbabwe attributes the alarming depreciation of the Zimbabwe dollar against the US dollar to illegal Forex trading and a fixed exchange rate. Recently, the country adopted an auction market system, where transactions determine exchange rates as opposed to dealers.