SOME mobile money operators have been printing money
through creating overdrafts and fictitious credit, most of which was channelled
to buy foreign currency on the parallel market — a practice that has been
weakening the Zimbabwe dollar and causing runaway prices of goods and services,
it has been revealed.
A recent forensic audit to assess “the integrity,
compliance and efficacy of mobile money platforms” — conducted at the behest of
the Reserve Bank of Zimbabwe (RBZ) — unearthed failure by operators to deduct
and remit taxes, including “rampant abuse of agent, super-agent and bulk
payment wallets for purposes of trading on the foreign exchange parallel
market”.
The probe included all mobile payment operators — EcoCash,
OneMoney, Telecash and Mycash.
RBZ Governor Dr John Mangudya said on Friday the delinquent
mobile money operators and individuals that have been abusing the platforms
through facilitating illegal transactions will soon be brought to justice.
“A forensic audit to assess the integrity, compliance and
efficacy of mobile money platforms and transactions in Zimbabwe has revealed
significant weaknesses in the systems of the mobile payment operators, namely
EcoCash, OneMoney, Telecash and Mycash,” said Dr Mangudya in his latest
Monetary Policy Statement (MPS).
“For identified serious breaches, appropriate regulatory
and disciplinary measures will be instituted against delinquent mobile money
operators and or culpable individuals in accordance with the law.”
The central bank recently made shocking revelations of the
extent of money creation by some of the operators.
In May this year, the RBZ, while responding to a High Court
application by EcoCash to reverse its directive to freeze accounts of some
agents suspected of illegal transactions, alleged that some EcoCash agents
inexplicably had overdraft facilities in excess of $40 million.
The apex bank, through its legal representatives Kantor and
Immerman, claimed that the unexplained bank balances were systematically
devaluing the Zimbabwe dollar and making life increasingly difficult for everyone.
“How can an entity or individual have an overdraft on an
electronic payment platform such as EcoCash? . . .
“Applicant has failed to proffer an explanation and is
challenged to do so under oath . . .
“The applicant can only operate the payment systems in a
lawful way. Operating the payment systems unlawfully through a Ponzi Scheme and
shadow banking amounts to a violation of the law . . .” said the RBZ in the
court papers.
However, High Court judge Justice Webster Chinamora, who
presided over the case, upheld the suspension and indicated that the relief
sought by EcoCash was tantamount to proscribing the RBZ from exercising its
functions in terms of the law.
The mobile money operators stand accused of weak anti-money
laundering controls, wilful disregard for regulatory directives and culpably
allowing employees and customers to delay or bypass account freeze orders.
It is believed that even after monetary authorities
suspended and froze agent and bulk-payer wallets on June 27, mobile money
operators have been allowing illegal foreign currency dealers to use multiple
individual wallets as a means to bypass the transaction limits and continue
with their illicit transactions.
The operators have since been instructed to close all
multiple wallets and allow only one wallet per individual.
Agent lines, which were predominantly being used for
illegal foreign exchange transactions, have been abolished.
The clampdown on malpractices on mobile money platforms
through putting them under increased surveillance and the introduction of the
foreign currency auction system on June 23 has relatively stabilised both the
foreign currency exchange rate and prices of goods and services.
This has driven regulators to double down on measures meant
to restore sanity and discipline on mobile money platforms.
Merchants are no longer allowed to make payments from their
own wallets as this facility was being abused.
“Retailers and other service providers will be permitted to
continue operating merchant wallets to allow the public to pay for goods and
services . . . E-value held in merchant wallets shall be liquidated to the
merchant’s bank account.
“In this regard, mobile money operators shall have systems
in place to ensure automatic liquidations from the merchant wallets to the
merchant bank accounts. This measure shall ensure that mobile payment platforms
. . . shall be restricted for transacting purposes in furtherance of financial
inclusion in the economy,” Dr Mangudya said. The stabilisation of prices in the
past nine weeks has brought welcome relief to consumers and restored the buying
power of the Zimbabwe dollar.
Most of the monetary policy measures that were unveiled in
the MPS last week were specifically designed to guarantee stability in the
medium to long term.
The RBZ is confident that the new measures, including the
re-direction of the foreign currency demand pressure from the parallel market
to the auction and the “bank’s contrary monetary growth stance” — which
essentially involves exercising restraint on printing money and mopping up
excess money in the financial system — will help to foster stability. Sunday
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