Zimbabwe has blocked the majority of mobile money transactions and suspended the country’s stock exchange as it seeks to stabilise its currency.
On Friday (June 26th), Information Secretary Nick Mangwana halted “monetary transactions” made via the country’s four major mobile money providers EcoCash, MyCash, One Money and Telecash. The move prompted outcry, with merchants unable to honour any transactions apart from for goods, services or utilities, and a daily limit of ZWD5,000 ($13.82) imposed on all accounts.
The Zimbabwe Reserve Bank has clarified that mobile money users are not the intended targets of the restrictions, and that utilities payments can continue, although withdrawals must be processed through the country’s banking system. The government is shutting down bulk payments and mobile money agents, as well as transactions between merchants.
Bloomberg reported the country’s Ministry of Information as saying that it had “impeccable intelligence” that the “phone-based mobile-money systems of Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy.”
The Zimbabwean dollar was pegged to the US dollar at a rate of 25:1, but after this was scrapped in March the currency has dropped to a rate of 57.35 to one, an inflation rate of 786%. President Emmerson Mnangagwa recently claimed that “malpractices” had hampered government efforts to bring the crisis under control.
The ministry added that suspending mobile money transactions would “facilitate intrusive investigations, leading to the arrest and prosecution of offenders” and that the measures would not be lifted until the country’s mobile money platforms were “reformed to their original purpose and all the current phantom rates of exchange have converged into a genuine rate of exchange that is determined by market forces under the Foreign Currency Auction system.”
Zimbabwe Reserve Bank Governor John Mangudya said: “These unprecedented measures have been necessitated by the need to protect consumers on mobile platforms, which have been abused by unscrupulous and unpartisan individuals and entities to create instability inefficiences in the economy.”
Regulator POTRAZ confirmed that at the end of 2019, Zimbabwe had over 7.3 million mobile money subscribers, with Econet taking the lion’s share of the market.