Zimbabwe’s deteriorating economic situation is forcing authorities to sign off on some desperate and controversial decisions. Some of such decisions include the abrupt suspension mobile money as well as the recent designation of Zimswitch as a national payment switch.
Reserve Bank of Zimbabwe Suspends Mobile Money Service
Owned by banks, Zimswitch is the current payments switch to the same financial institutions. This designation has been made to, ostensibly, enable interoperability between financial services providers.
The country’s largest MMO, Ecocash appears to be the target of this move by RBZ. Over the years, Ecocash has routinely been accused of frustrating efforts to enable interoperability between MMOs among a slew of charges.
Fighting Mobile Money Monopoly
Ecocash’s critics say the MMO does this to preserve its monopoly, a status it gained after investing heavily in building its infrastructure. Ecocash inevitably became the most dominant MMO, a fact confirmed by findings of a survey conducted by the local telecoms regulator. According to the findings, Ecocash accounts for more than 94% of all mobile money payments.
Furthermore, a study by the RBZ itself, reveals that mobile money dominates national retail payments, accounting for 80% of all such payments.
Inevitably, Ecocash’s dominant position has long been a source of tension with regulators and now government. Yet despite the threats and directives, Ecocash has steadfastly refused to be cowed into relinquishing its dominant position.
However, the country’s accelerated economic decline, as well as the hyperinflation environment, is reportedly creating tension and paranoia in corridors of power. Some commentators point the surprising decision to suspend mobile money transactions as an example of this paranoia.
As expected, Ecocash dared the government by refusing to abide by the suspension order. Ecocash argued that the government official making announcement erred as he did not consult with the RBZ before going public. The shortlived stand-off ended when the RBZ finally issued a statement wherein it regurgitates the government position.
Ecocash: Zimbabwe’s Economic Bogeyman
Now both government and RBZ sing from the same hymn book when it comes Ecocash. They accuse Ecocash of fueling activities on the “illegal” foreign currency black market. Ecocash is also accused of running a Ponzi scheme. Somehow, Ecocash has become Zimbabwe economy’s bogeyman.
The designation of Zimswitch as the payments switch for all financial services providers appears to show a determination by authorities to check Ecocash’s influence. By gaining indirect control of the popular MMO, authorities hope they will also be able to rein on influential foreign currency dealers.
Ultimately, killing the black market for…