This week Ecocash, the operators of the largest mobile money wallet in Zimbabwe released some depressing statistics. The total value of mobile money transactions had fallen by a whopping 11% compared to the previous period. The drop in volume was not even a mystery: the punitive $5 000 ZWL per day transaction limit was to blame. Now the government has had a change of heart. You can now spend as much as $35 000ZWL per day but each transaction is still limited to $5 000ZWL and your weekly limit is still capped at $35 000ZWL.
How do the new limits work?
It’s simple really. You can spend up to $35 000 ZWL per week using your mobile wallet. Before the new directive you could only spend $5 000 ZWL per day. Any other attempts to spend money after you had reached your limit would fail. Under the new directive your transactions are still capped at $5 000 ZWL but you can make up to 7 such transactions on a single day. Once you have spend $35 000 ZWL you have reached your weekly limit. You will have to wait until the following week before are able to make any new transactions.
What are the benefits of these new limits?
The truth is that the $5 000 ZWL was too restrictive and ended up affecting ordinary Zimbabweans going about their normal business. You couldn’t, for example, buy certain data bundles, pay for unlimited internet packages from TelOne and ZOL among other things because these items cost way more than the arbitrary $5 000 ZWL limit.
On most days people wouldn’t mind the limit but during the month end period, all hell would break loose as people scrambled to make payments for various utility and essential services. While most people don’t spend $5 000 ZWL everyday, they tend to spend much more than this during the month end days. With the new limits people can now split their transactions if need be. Most companies like ZOL allow you to do this.
Is the unofficial exchange rate going to shoot up?
Probably not. Despite the fiction peddled by officials, it’s not mobile money that is to blame for the wild rate fluctuations we saw before the introduction of the auction system. The reason for these rates were varied but included: excessive money supply, lack of a formal market and poor productivity at home. Some of these problems persist but the biggest one of money supply appears to be under control for now. There might be a speculative twitch in rates but it’s unlikely to be sustained unless other factors conspire to favour this spike.