Saturday, 29 August 2020

ECOCASH LIMITS TO CURB ILLEGAL DEALINGS, SAYS MANGUDYA


The daily individual limit of $5 000 for mobile money transactions will cover the vast majority of ordinary payments by citizens, but help to contain illegal dealings that fuel black market foreign currency exchange rates and consequently push up prices of goods and services.

EcoCash, the dominant mobile money platform, announced on Wednesday that it was implementing the daily limit of $5 000 imposed by the Reserve Bank of Zimbabwe (RBZ).

RBZ Governor Dr John Mangudya directed in the Mid-Term Monetary Policy Review statement recently that as part of measures to entrench price and exchange rate stability, that individuals were limited to daily transactions totalling $5 000 a day, that the temporary suspension of agent lines was being made permanent, and that merchants could still receive unlimited payments from customers into their merchant lines, but, as has been the case since June, had to transfer this money to their bank accounts to spend it.

Economist and member of the Monetary Policy Committee Mr Eddie Cross told The Herald through e-mailed responses that the transaction cap will not affect business operations. 

“In the past 12 months, EcoCash handled 1 938 billion transactions worth $225 billion dollars — an average transaction of $116. This means that the limit of $5 000 should cover the great majority of transactions,” said Mr Cross.

“Once the situation settles down, this limit can be reviewed, but the authorities had to limit the capacity of the system to transact in buying foreign exchange. This they were doing through their agents funded by cash transferred to them by their bulk payers system. This affected only 200 or so clients and was being abused. While the measures taken will affect their agents, their clients should not be disadvantaged to any extent.”

Pan African Chamber of Commerce board member Mr Langton Mabhanga said curtailing EcoCash and other mobile money transfer limits will bring “sobriety to the financial system”.

“Illicit and errant transactions and money laundering are likely to be pacified by the new policy. Price skimming, advance pricing and overrating or underrating of mainstream currency that gave rise to inflationary pressures that were associated with the mobile money transfer activities, might have just been withered by the new raft of regulations. 

“One door shuts, another one opens! The financial sector now calls for proliferation of sane and compliant plastic money monitored platforms strictly via a regulated national electronic funds switch such as ZimSwitch,” he said.

The measures by the RBZ followed a forensic audit to assess the integrity, compliance and efficacy of mobile money platforms and transactions in Zimbabwe, which revealed significant weaknesses in the systems of the mobile payment operators, namely EcoCash, OneMoney, Telecash and Mycash.

The RBZ uncovered a number of deficiencies including non-adherence to Know-Your-Customer principles characterised by, among other issues, creation of mobile money accounts using fictitious and unverified identification particulars; and the creation of money on the platforms through overdrafts and fraudulent or fictitious credits that were not backed by balances in the mobile money trust accounts.

Since the last monetary policy statement in February 2020, the RBZ, through the Monetary Policy Committee implemented a number of measures aimed at ensuring exchange rate, price and financial stability in the economy, while supporting real economic activity.

In particular, the RBZ introduced the foreign exchange auction system in response to the volatility in the pricing of goods and services due to the rising parallel exchange rate premium. The subsequent introduction of the auction system for SMEs, running concurrently with the main auction, will further support current efforts to improve the management of foreign exchange in the economy through genuine and unmanipulated market forces. Herald

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