As we work up to the debris of the ongoing wars between the RBZ and illegal foreign currency dealers and those who illegally sell cash at a premium we need to spare a thought to over 50 000 legitimate Ecocash agents who became collateral damage and were rendered jobless by the RBZ’s decision to ban cashin and cash-out.

Blaming Ecocash for the country’s economic problems is stupid

A lot of people are ignorantly celebrating yesterday’s drastic decision by the RBZ. They contend that most of these agents were engaged in illegal trade. Be as it may there are things that we have to note:

  • Banning Ecocash cashin and cashout is not going to suddenly make cash available. Instead of paying a premium to some agent expect to waste time waiting in a bank line as cash shortages will persist. The myth that illegal cash sellers are hoarding all the cash and it will now be available is just a myth. According to the RBZ’s own data we have a cash shortage.
  • There are still other forms of payment available. Expect those selling cash to use these. As long as there is a way to move electronic currency, cash sellers can still get paid, so can cash sellers.
  • Ecocash has been around since 2011. Before all these cash shortages the system worked perfectly with the service being used to send money, the recipient would then cash-out. Thanks to the government printing RTGS as a way to finance its profligate spending, cash shortages started. The premium system arose naturally to resolve the issue of the supply gap.

It is the duty of the Reserve Bank of Zimbabwe to make sure that we have enough cash in Zimbabwe. They have failed dismally on that point. It was the RBZ that printed the RTGS dollar and created the cash crisis. People seem to be losing sight of that fact. The RBZ has both the authority and the responsibility to make sure the cash crisis is solved.

How does banning Ecocash solve the cash crisis help? What will all those legitimate businesses that rely on Ecocash cashin and cashout do? Yes even ZIMPOST relies on cashout to accept payments. The rash decision to ban cashin and cashout reveals something worrying of this RBZ and this government. They are willing to scorch the earth to have their way.

Does the government really want to solve the cash crisis

The government has found a way to make money out of the cash crisis too. The Finance Minister is exceedingly proud of that tax and so is the rank and file. The government, just like those illegal money sellers is making a killing off the sweat of the transacting public.

One cannot help but ask if they are really in a hurry to solve the cash crisis at all. Why aren’t they reducing RTGS and print more notes as they have promised to do in times past? Coincidentally it is that 2% tax that ensures that cash and RTGS dollars are not equal. That is an economic fact no amount of banning will ever stop.

On a path to political hell

Ever since last year when the government ordered the separation of FCA RTGS and FCA Nostro account, both the Fiscal and Monetary authorities have demonstrated an affinity for rush and ambush policies. Sadly every time that they have introduced these policies they have not been well received.

In fact, every time these policies have been introduced, things have gotten worse. The rate doubled upon the separation of accounts. The rate accelerated when the RTGS dollar was officially introduced.

And yet the government has continued with its ambush policies. As we have pointed out, they are stifling businesses. Eventually, just like they did in 2008 they will eventually die. Then it will be an economic hell even for the populist cheering at these misguided drastic measures.

One thing people need to understand is that the RBZ is not our friend. Their main aim is to control all the foreign currency and that’s usually for the benefit of a few elite. At no point has the RBZ allocated foreign currency for the benefit of the informal sector. The informal sector, despite receiving no support, is what drives our economy. I shudder what will happen if the RBZ succeeds.