Zimbabwe’s central bank cracked down on Strive Masiyiwa’s Ecocash, after it discovered in February this year that the country’s largest mobile money operator was turning over three times the amount that all the commercial banks in the country, combined, were turning over.
Economist Eddie Cross who is a member of the Reserve Bank of Zimbabwe’s Monetary Policy Committee, which was set in September last year, told OpenParly that the main purpose of Ecocash was to handle relatively small transactions.
Cross said the central bank was, however, puzzled when they discovered in February that Ecocash had turned over three times the amount that all the commercial banks, combined, had turned over.
Zimbabwe has 13 commercial banks and 21 banking institutions in all.
The central bank discovered that Ecocash had 96 bulk payers who in February alone transferred $3.8 billion to Ecocash trust accounts.
The money was used to buy foreign currency on the black market through some 75 000 agents.
Cross said when the central bank asked Ecocash to reduce the amount its agents could transact to $10 million a month, Ecocash complained that this was too little.
The central bank ordered the amount to be reduced to $100 000 a month and Ecocash took the bank to court and lost.
Cross said this did not stop the trading on the black market so the central bank had to take draconian measures and shut down the entire operations and has now reduced daily limits to $5 000 with each individual being forced to have one mobile money account.
“When we intervened the black market rate had gone down to 200:1,” Cross said, adding that this was unthinkable because the fundamentals did not support this.
He said that although the $5 000 a day was very restrictive, Ecocash had to play by the rules and stop operating what amounted to a Ponzi scheme.
“Ecocash have gotta play ball. They have gotta start behaving responsibly. They are not to use themselves for this kind of speculative Ponzi schemes. They were printing money. They were giving credit, on an unlimited basis to their agents. You can’t do that,” he said.
The crackdown on mobile money transactions and the introduction of a foreign currency auction system have seen the Zimbabwe dollar stabilize against the United States dollar.
It appreciated against the greenback, though marginally, for the first time this week and is currently trading at $83.32 to the United States dollar.
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