Ecocash has made an urgent chamber application at the High Court seeking an order that will reverse the Reserve Bank’s directive that ordered Ecocash to freeze some agent lines. Yesterday, Ecocash confirmed the rumour that they had received an order from the central bank directing them to shut agent lines that had transactions exceeding $100 000 per month and did not meet the criteria.
In its application Ecocash makes it clear that they feel the order is irrational as they were not consulted before the decision was issued:
… the Respondent further placed a condition that those affected Agents who wanted to continue with agent business must reapply and the application be subject to confirmation by the Respondent.
The Applicant (Ecocash) and its Agents were not heard before the decision to suspend and freeze aforementioned accounts was made. The provisions of section 10 of the Act that the Respondent placed reliance on do not give the Respondent powers to suspend the Agents from participating in the Ecocash system. No crime has been alleged against the Agents and when considered together with all the relevant facts, the directive is illegal and irrational.
Ecocash goes on to point out the fact that they have over 53 924 agents who are distributed throughout the country. It’s however not clear how many of these are affected by the decision. However given how it works and factoring in inflation one has to guess that it’s a lot. This army of agents also provides essential services to 11 million registered Ecocash users.
The RBZ directive is the latest shot against suspected illegal foreign currency dealers who have taken a particular liking to the Ecocash system. The central bank and the government blames these dealers for the continous deterioration of the Zimbabwe dollar due to their speculative behavior that saw rates climb to 1 USD: 50 ZWL.
However, during the lockdown period in a country with acute cash shortages, a lot of people have come to rely on mobile money. Ecocash is favoured and used as the de facto currency by a lot of people because even the unbanked use it.
The decision might affect a lot of customers especially the part where agents are not allowed to conduct prepaid electricity purchases. However, the impact might not be as wide as one would first think. Given the cash shortages genuine cash-ins are not common and most cashouts are actually made at a premium with agents selling cash. Still people have come to rely on these illegal operations too.
Public sentiment is mixed when it comes to the RBZ’s decisions, some people are praising the RBZ for cleaning up the system while others expressed alarm at the lack of finesse and distinction between the guilty and the innocent.