Sunday 23 August 2020


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 Mail


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