Sunday, 3 May 2020

WHERE IS THE LOCKDOWN CASH?


The government is yet to disburse cash handouts it promised to cushion vulnerable populations against the effects of the Covid-19 lockdown, 35 days after.
Beneficiaries from marginalised communities and the small-scale informal sector, are supposed to benefit from a $600 million fund, getting $200 each in the phased roll-out programme.

They are bound to suffer another blow, it emerged, after a fresh Reserve Bank of Zimbabwe (RBZ) directive to reduce small financial institutions’ daily transaction limits from $2 million to $1 million.

The latest directive comes after government was forced to backtrack on its decision to impose its ailing telecommunications entity, NetOne, to manage the money transfers through One Money, as reported recently by The Standard, working in conjunction with Information for Development Trust, an anti-corruption non-profit outfit.

This move was seen as an attempt to nudge out the rival Econet Zimbabwe’s Ecocash facility and provide NetOne a chance to gain market share.

According to the Postal and Telecommunications Regulatory Authority of Zimbabwe, NetOne processed only 1.1% of the total mobile money transactions in 2019, while Econet handled more than 98%.

Government was supposed to start disbursing the funds, beginning with the initial $90 million (US$3.6 million) starting mid-April but to date, no one has received the $200 allocation, 35 days after President Emmerson Mnangagwa announced the national lockdown to combat the spread of the deadly Covid-19.

Mnangagwa has since extended the lockdown by another two weeks.

Globally, Covid-19 has killed more than 240 000 people, with over 3.4 million infections. In Zimbabwe, four people have died against a total 34 positive cases to date.

Zimbabwe is ranked among the poorest countries in Africa due to a long-ailing economy burdened by an unemployment rate independently estimated at more than 90%.

Public Service, Labour and Social Welfare minister Paul Mavima confirmed that no disbursements have been made to the beneficiaries, pinning hope on Mnangagwa to bring more interventions to cushion citizens.

On Friday, Mnangagwa announced a second-two week lockdown extension and said government had mobilised $18 billion to respond to the Covid-19 pandemic.

“You have not seen any beneficiaries because no disbursement has been done as of now.

“I have told you that my expectation was that we were going to start disbursements before the end of April, but there is supposed to be a wider intervention, which is going to be announced by the president,” Mavima said before Friday. 

But Small to Medium Enterprises Development minister, Sithembiso Nyoni, sent out a different message, claiming that some people had already started receiving the cash transfers, although conceding that the disbursement process was slow, in an interview with NewsDay Weekender.

“They (government officials) are not sitting on the funds. There are some people that have received the money; and what I am saying is that they will get the funds.”

Informal traders, most of whom live from hand to mouth, are failing to cope due to reduced opportunities to generate income during the lockdown, which has been extended to May 17.

They and civil servants, who keep going on small loans from micro-finance institutions (MFIs), will find it even harder to survive after the RBZ’s Financial Intelligence Unit issued a directive reducing limits for transactions for all daily bulk payer transactions from $2 million to $1 million two weeks ago.

Experts say the reductions would limit the MFIs roll out capacity at a time banks were closed and the traders as well as civil servants could not access bank loans.

Zimbabwe Association of Micro-Finance Institutions (Zamfi) chairperson, Virginia Sibanda, said the move by the central bank was disastrous, especially in the Covid-19 lockdown days, but hoped it was for a short period.

“I wouldn’t know what led to that decision by the RBZ, but it would not make sense since there was a push from government to make use of mobile money platforms because of the lockdown and so on,” Sibanda said.

“This, will however, cripple operations as MFIs depend on mobile money platforms for transactions, especially during the lockdown.”

MFI sources, who spoke on condition of anonymity said the RBZ move took them by surprise as they were, on the contrary, pushing for an increase in daily bulk transactions to $10 million, to factor in spiking inflation, which is currently more than 500%.

The RBZ website indicates that 203 MFIs are registered with it, with most of them processing into mobile accounts, mainly Ecocash.

“We disburse loans to civil servants and with the reduction, if you were serving 10 000 people, they will now be half of that and in these lockdown days, it is a disaster,” said one agent.

“The timing is regrettable and poorly thought out especially as we are facing many challenges during the lockdown,” another agent added.

“Imagine civil servants in rural areas, who mainly have access to mobile money transfer facilities.

“We will be forced to put money into our clients’ bank accounts and consumers, mostly soldiers, nurses and teachers will be forced to go to the banks, which are closed anyway.”

The RBZ move will also force the MFIs to cut on personnel because their capacity to pay workers will be reduced, he said.

RBZ governor, John Mangudya, however, said the Financial Intelligence Unit was acting to stop illicit deals by some MFIs.

“They are not even supposed to be dealing with such figures in any case,” Mangudya said.

“Once they start trading with $2 million, it is no longer micro and when it gets to that, they should transact through a bank and not an agent.

“If they want to do bigger transactions, they should go through a bank. They are coming to you with dirty hands. We know some of them were now even operating bureaux de change instead of their core business.”

The central bank recently froze the accounts of scores of MFI agents, accusing them of illegal dealings. Standard

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