Update: EcoCash is now working again. It’s not clear if the downtime was in relation to the RBZ directive or if they were performing some maintenance of some sort. We are reaching out to EcoCash representatives to find out.

When EcoCash services were not accessible from around 9 am we thought EcoCash was not playing when they said they would have to pull down their system in order to comply with the RBZ’s order to stop cash-in and cash-out.

EcoCash explained that they would have to temporarily shut down in order to comply with the directive and it seemed to be the case when both the EcoCash USSD and application were not accessible.

It’s not clear whether this outtage for some 40 or so minutes is what they had hinted at as being necessary for them to comply with the RBZ order.

Also read, EcoCash Takes RBZ To High Court Over Cash-in & Cash-out Ban

The post UPDATE: EcoCash Was Down For Just About 40 Minutes Maybe Not The Promised Outage appeared first on Techzim.

African governments are often derided for their use of applying similar methods (which are ineffective most times) when faced with problems. Like many-an-African government Ugandan leadership has come out and warned citizens against use of cryptocurrencies.

The Finance Minister in Uganda has declared that the government doesn’t recognize cryptocurrencies and won’t be held responsible if anyone loses money whilst buying or selling cryptos.

Let me state clearly that the online cryptocurrency businesses are not regulated at the moment and therefore carry a significant risk of loss of savings, with no recourse to protection or insurance by the government

Bank of Uganda Deputy Governor – Louis Kasekende

The Finance Minister also said the Central Bank in Uganda feels cryptocurrencies don’t meet all the requirements of a genuine currency (i.e they are not backed by assets). He also noted that they are used for fraudulent purposes, the go-to statement for any organisation cautious about cryptocurrencies.

The Ugandan government hasn’t gone as far as banning cryptocurrencies which could be a positive or negative depending on which side of the fence you lie on. In Zimbabwe, the RBZ took a similar stance and warned the public but later on, they issued an outright ban so if African governments do follow one leadership manual then crypto-enthusiasts in Uganda should brace themselves for a hard landing.

Also read, RBZ Has A Strategy For Fintechs And Cryptos: Bureaucracy

The post Ugandan Government Warns Citizens To Avoid Cryptos appeared first on Techzim.

The Zim currency drama unfolds. No comment needed from us. Here is the press statement released by the Reserve Bank of Zimbabwe as promised earlier:

PICTURES OF NEW NOTES CIRCULATING ON SOCIAL MEDIA

The Reserve Bank of Zimbabwe (“RBZ”) has taken note of pictures circulating on social media that show recently introduced 2 dollar banknotes in sealed packs, suggesting that the notes are already being traded on the parallel market.

The Bank has conducted investigations on the matter, and the findings are that the banknotes in the circulating pictures emanated from Ecobank. Preliminary investigations by RBZ at Ecobank indicate that an amount of ZW$15 000 was withdrawn by one of their customers. Ecobank, together with their customer, are now assisting the Zimbabwe Republic Police with further investigations on this matter.

Appropriate disciplinary measures shall be taken against the bank and the customer and anyone else found responsible for such malpractices which bring the RBZ and the entire banking system into disrepute. Such malpractices cannot and should not be condoned.

In the meantime, the Bank would like to advise the public on how banks withdraw cash from the RBZ. The procedure is such that banks transfer the equivalent amount of their cash requirements to the RBZ through the RTGS system. The banks will then collect the cash from the RBZ to their central cash depots from where they distribute to their branch network.

Dr J P Mangudya Governor

14 November 2019

The post It’s Ecobank That Has Put New Currency On Black Market Says RBZ appeared first on Techzim.

A recent statutory instrument issued out by the RBZ will ensure the never-ending currency confusion in Zimbabwe… never ends. The statutory instrument orders exporters to pay the Zimbabwe Electricity Supply Authority (ZESA) in forex for the next 6 months.

Yuhp, remember the use of foreign currencies for local transactions was banned a few months ago? Well, ever since the ban, slowly but surely it’s been reversed conditionally by the same people who issued it out…

Anyway, the statutory instrument outlines the following to ZESA:

• money from exporters can only be used to pay for electricity, imports, spare parts/critical equipments, foreign loan repayments and foreign insurance premiums;
• exporters that export less than 80% of their output will still have to pay 35% of their electricity bill in forex (they can pay 100% forex if they want to – Ha! good luck with that!);
• ZESA will keep all the payments in a “special account” reserved for the aforementioned purposes and will need approval from the RBZ to spend the money in these accounts.
• All forex payments must be made from Nostro accounts to bar the use of black-market funds.

Apart from being an implicit admission that the Interbank is a failure that doesn’t work, there are still concerns when an independent organisation suspected of abusing funds has to get approval from a regulator who is also suspected of abusing funds to spend its money.

Arrangements such as these come with a high risk of corruption and the regulatory back and forth screams of a regulator plugging holes as they arise, not long-term planning to fix the problems at the core.

The post RBZ Instructs Exporters To Pay For Electricity In Forex appeared first on Techzim.

The RBZ is introducing a new measure to improve the efficiency or more specifically increase the trading of foreign exchange through legal means- an e-trading platform.

Eddie Cross, a member of the Monetary Policy Committee said the platform might be launched this coming week:

Next week, we hope to launch the new electronic trading platform for the interbank market and if we can attract enough foreign exchange into the market, it will help steady the rate and eventually, we hope it will strengthen the rate over time.

Eddie Cross

The platform is expected to offer the following functionality:

• charting packages
• news feeds
• account management functions

Additionally, the Monetary Policy Committee also agreed to launch a market tracker under reuters system in order to enhance transparency.

The post RBZ To Launch Electronic Trading Platform For Interbank appeared first on Techzim.

The current bank exchange rates for the ZWL$ today are as follows:

• USD to ZWL$: 16.8890
• ZWL$ to RAND: 0.8401

Data according to the Reserve Bank of Zimbabwe

Black Market Rates:

• USD to ZWL$ zimrates.com  23.00
• USD to ZWL$  zwl365.com 22.70
• USD to ZWL$ bluemari.info 22.90
• USD to BOND: zimrates.com 16.7

More: MarketWatch

The post Bank Foreign Currency Exchange Rates Today – 7 January 2020 appeared first on Techzim.

Yesterday the RBZ sent out a warning to companies suspected of destabilising the country due to “illegal activities” forex market. The Central Bank followed this up by announcing that one of the companies being investigated by the Financial Intelligence Unit has had their accounts frozen.

Earlier today, the Reserve Bank of Zimbabwe issued a statement raising its concern on the illegal activites of foreign exchange rate manipulators who have been engaging in activities that have exerted pressure on the exchange rate in the last few days.

The RBZ escalated the matter to the Financial Intelligence Unit (FIU) for investigation and the FIU has so far identified one entity (China Nanchang). which has used its bank accounts to inject millions of dollars into the parallel market in the last few days.

The FIU has ordered the freezing of the identified account pending further analysis and is undertaking ongoing surveillance to identify more culprits involved in the paralled market transactions, particularly on the EcoCash platform.

The RBZ remains focused on its mandate to ensure market stability. To this end, the RBZ will work closely with the FIU to identify and take appropriate action, in terms of the law, against any culprits involved in illicit foreign currency activities and manipulation of the foreign exchange rates.

John P Mangudya – RBZ Governor

Interestingly, Nanchang is also the mysterious company that was announced to be supplying the Harare City Council with 600 solar-powered buses last year in March. 11 months later the buses haven’t materialised and now the company is said to be funding the parallel market.

The post RBZ Freezes Accounts Of Company Which “Injected Millions Of Dollars In Parallel Market” appeared first on Techzim.

RBZ has denounced claims circulating on social media suggesting that the central bank has devalued the local currency.

In a Twitter post, the bank has said such disinformation is a tactic to cause panic:

The Bank would like to advise the public to disregard, with the contempt it deserves, the false and mischevious article circulating on social media suggesting that the Bank has devalued the local currency. The intention of such disinformation is to cause panic and despodency and ultimately destablize the country’s foreign exchange market manipulation of exchange rate.

We wish to advise the public that, consistent with the Monetary Policy announcment on 19 November 2019, the Bank is enhancing the Reuters monetary exchange trading system to ensure efficiency and effectiveness in the allocation of foreign exchange to the productive sectors and enhancing price discovery on the interbank market. Already, engagements have been done with Commercial banks to ensure smooth implementation of this system. Banks are working on a user-test environment to enhance the efficiency of this foreign exchange trading system.

John Mangudya

The post ZW$ Has Not Been Devalued – RBZ appeared first on Techzim.

2020’s Monetary Policy Statement is out now and RBZ has once again discussed what their plans for the local Fintech industry are.

Background

The focus on Fintech alluded to last September in the mid-term monetary policy. The RBZ decided to create a National Fintech Steering Committee which would provide “policy direction in the Fintech space”.

New developments

In the most recent Monetary Policy Statement, the RBZ says they’ve come up with a “regulatory sandbox framework” that will be used to connect Fintech’s and financial institutions:

Further to the advice in the 2019 Mid Term Monetary Policy Statement, the Bank has embarked on several initiatives to establish the Fintech agenda. The Bank is in the process of finalizing a regulatory sandbox framework.

The framework will outline the qualification, application and evaluation criterion for entities to be admitted into the sandbox. The sandbox provides an opportunity for innovators to connect to banks and other financial system players. The operationalization of the framework will thus promote competition and efficiencies through innovation

John Mangudya – 2020 February Monetary Policy Statement

Outside of the framework, the Reserve Bank Governor also urged banks to ” upgrade their ICT systems consistent with the developments in the Fourth Industrial Revolution”. I would assume that this move is meant to make it easier for banks and Fintech’s/Innovators to speak to each others systems.

Finally, Mangudya also encouraged banks to explore new technologies and business models. Fintech’s are agile and present some advantages over banks – one of which is their freedom from legacy technology.

Mangudya encouraging banks to adopt some of these technologies and business model will ultimately benefit consumers especially at a time when the banking business model in Zimbabwe basically boils down to “let’s make as much as we can through bank charges.” Not exactly a beacon of customer-centric solutions that the banks claim to provide.

The post Upcoming Regulations Will Allow Innovators To Access Banks – RBZ appeared first on Techzim.

There’s a widespread belief that the Zimbabwean government along with other African states will be announcing Apollo Fintech as their partner in launching digital currencies.

Rumours are the coin will be gold-backed and the CEO of Apollo Fintech recently confirmed they are working with a country on a gold-backed coin:

We have gotten a large number of questions pertaining to rumors circulating that Apollo will be used in a strategy/survival MMO that is the distribution method for a gold backed coin. I want to set the record straight. It is true, and the details are coming soon.

Stephen McCullah – CEO of Appollo Fintech

Apollo claims to be the fastest blockchain in the world – which has been one of the biggest constraints of the technology since it’s inception and has limited how much cryptos can scale in the past.

Apollo’s Steve McCullah also previously suggested that they were working with the Zimbabwean government “on more than one solution” on Xangle – a platform that aggregates crypto-related announcements:

The fintech also posted a blog post on the 24th of February stating that African payments were a priority in their strategy:

…that is a major priority. We have been in conference with a number of central banks to design a product that would be superior to what is available now. It will not only be for Africa, but it is a focus.

Interestingly, Apollo Fintech also currently offers a Government Bank Platform which they claim “gives a central bank the ability to conduct instant payments to and from any bank in the network using the local currency as well as foreign currency if needed.” This seems like something that could also interest our government and help them evade the effect of sanctions IF other banks were to ever join this platform.

Expectations from those close to Apollo suggest that the gold-backed solution for Zim will be launching in about a month, and we have gotten in touch with Apollo Fintech for more information.

The post Zim Government To Partner With Fintech To Issue Gold-Backed Digital Currency appeared first on Techzim.

During the recently held Parliamentary Portfolio Committee meeting, Bankers Association of Zimbabwe raised concerns regarding mobile money services and the unfair advantage they have over financial institutions.

Dephine Mazambani, BAZs Chief Economist said the advantage stems from EcoCash and other mobile money services being regulated by POTRAZ and not the RBZ, which simply isn’t true:

Money transfer agencies and banks are not regulated the same way. We are regulated by the RBZ while they are regulated by POTRAZ.

Our regulation is different but one of the key challenges is that while we are regulated differently, sometimes you see that we offer similar products which creates an uneven playing field and sometimes pose a risk to the financial sector, seismic risks.

It is the regulatory environment we are hoping can be levelled.

Dephine Mazambani – BAZ Cheif Economist

This is a pretty stunning statement coming from the representatives of banks because one would expect that they would have knowledge of the fact that mobile money is in fact regulated by the RBZ and not by POTRAZ as they believe.

Whilst BAZ claims there is an unfair advantage, it’s no surprise they didn’t cite any specific cases where mobile money services have actually benefited from being “regulated by POTRAZ” as they claim. There are no specific examples of this advantage simply because it doesn’t exist.

During the same meeting, Cassava Smartech’s CEO corrected Ms Mazambani stating that EcoCash (and mobile money service providers) were in fact regulated by the RBZ:

EcoCash is under the direct oversight of the RBZ. We are regulated under the National Payments System Act and we make as frequent returns and engagement with the central bank as any other financial services sector in Zimbabwe, including banks.

For certain services we are also regulated by the RBZ Finacial Intelligence Unit where we submit all our suspicious transactions reports and other general issues which pick.

Eddie Chibi – Cassava Smartech

Whilst you would expect that a regular person who doesn’t understand the financial system could be confused by the regulation of mobile money but to hear that from the BAZ is quite startling, especially when you consider the BAZ is supposed to be a reflection of the banks.

The post Bankers Association Wrongly Says Mobile Money Services Have Unfair Advantage Over Banks appeared first on Techzim.

Zimbabwe’s central bank, known for spectacular u-turns has once again flip-flopped on policy. A circular sent out in the last few minutes declares that Zimbabweans can once again use the United States Dollar as legal tender;

The circular claims that this will make it “easier for the transacting public to conduct business during this difficult period”.

Reading the statement, what instantly comes to mind is the fact that Mthuli Ncube remarked that “good money drives away bad money” not so long ago;

The problem he referred to back in September 2018 still exists so it will be interesting to see how the US$ supply will fare this time around.

Even more interesting is the fact that the RBZ has fixed the exchange rate again, this time to 1:1 1:25. Whilst the fixed exchange rate failed spectacularly the last time it was effected maybe the existence of a global epidemic will see it fare better this time around – at least that’s what the RBZ seems to be suggesting here.

Reintroduction of a fixed exchange rate is also a u-turn from the Central Bank’s position announced two weeks when they declared on the 11th of March that the new Interbank Market Exchange Platform would “allow foreign exchange to be traded freely amongst the banks and permit a true market exchange rate to be determined.” To hell with all of that they’ve said today.

Where will the money come from?

The biggest question you are left asking is where the US$ will come from. We stopped using it because it was in short supply and everyone was trying their best to externalise it or keep it as far away from local financial institutions as possible and not much has changed.

If anything local currency has become much less attractive than it was when the US$ was banned so it will be interesting to see how all of this unfolds. Personally, I don’t expect much good to come from this…

Also read:
Coronavirus And The Value Of The Zim Dollar VS USD
Opportunists: Government, RBZ Discard Interbank Rate ‘In Response To Coronavirus’

The post RBZ Approves Use Of US$ As Part Of Emergency Response To Coronavirus appeared first on Techzim.

Individuals/Families who rely on remittances where caught between a rock and a hard place when it was announced that money transfer agents would not be exempt from lockdown.

Whilst this decision was made to safeguard the health of the general public, it meant that a significant number of Zimbabweans who rely on remittances were cut off from their only source of funds at a time they need to stock up on food and other vital resources.

RBZ has decided to loosen its grip on money transfer agents like Western Union and other remittance services, allowing them to reopen from the 8th of April.

• Money Transfer Agents (MTAs) branches operating in retail outlets shall, with effect from Wednesday the 8th of April 2020, operate daily within the timelines prescribed for opening of retail outlets or shops; and
• Money Transfer Agents owned by banks and those with own banking halls and branches outside banks and retail outlets or shops, shall open for business three times a week, that is on Tuesday to Thursday between 0900 hours to 1500 hours with effect from 8 April

Whilst the RBZ has urged MTAs to observe social distancing guidelines and to spread remittance access points in order to try combat spread of Coronavirus, this directive is indicative of one thing. A number of African governments simply cannot enforce a full lockdown because of the social context of Africa.

With those accessing remittances now allowed to go and access their money because they need it to survive, next informal workers who live from hand to mouth can also argue (rightfully so) that they’ll need to work on some days in order to make the bear minimum they need to survive and the chain goes on and on.

If anything, this should be a wake-up call to African governments to ensure that in future their countries can stand on their own to avoid endangering citizens lives because of a failure to provide an economy that can

The post RBZ Says Money Transfer Services Like Western Union To Start Operating During Lockdown appeared first on Techzim.

The RBZs Financial Intelligence Unit has directed all banks to freeze bank accounts linked to Mobile Money Agents listed in a note that was leaked to the media.

Acting Director-General Financial Intelligence Unit Oliver Chiperesa ordered banks to freeze, with immediate effect, all Ecocash and OneMoney agents suspected of involvement in money laundering.

Read the directive below;

Directive to Freeze Bank Accounts of Attached List of Ecocash and OneMoney Customers (Agents) Suspected of Involvement in Illicit Foreign Currency Transactions and/or Money Laundering

Please find attached list of Ecocash and One Money customers suspected of involvement in illicit foreign currency transactions and/or money laundering.

You are directed to identify all accounts of the listed persons/entities that are linked either to Ecocash or to One Money (i.e. accounts that allow the customer to move funds between the bank account and the mobile money wallet, and/or vice versa) and to, immediately freeze such accounts.

You are also required to submit by close of business on 3 May 2020, KYC information in respect of each customer, including (a) details of the accounts identified and frozen including balances, (b) business address of the entity, (c) names of all directors (d) name and contact details of the MD/CEO (e) list of the shareholders (f) list of the Ultimate Beneficial Owners and (g) the entity’s nature of business and source of funds.

It is critical that the freezing is effected immediately as any delay can result in funds being moved from the accounts before freezing is effected.

RBZ

The letter is accompanied by a list of 134 EcoCash and OneMomney agents whose accounts are to be frozen. The directive has already started being followed. Here’s what one of the specified entities received from their mobile money service provider:

What’s the Financial Intelligence Unit by the way?

It is a unit within the Reserve Bank of Zimbabwe responsible for enforcing money laundering practices. The unit is autonomous as well and functions distinctly from the central bank. It was established in 2004 in terms of section 3 of the Bank Use Promotion and Suppression of Money Laundering Act [Chapter 24:24].

Will this work?

This isn’t the first time such a directive has been given and in the past it isn’t exactly clear whether that has had a positive effect. Whilst it might have had an impact in the short term after a while rates always soar up again.

The quote wrongly attributed to Einstein comes to mind when it comes to some of the practices by the RBZ;

Insanity is doing the same thing over and over again and expecting different results.

unknown

Right now, the official exchange rate between the USD and local currency has been fixed at 1:25. As long as they force an exchange rate on the market, an opportunity will be created for changing money especially because forex itself is scarce. Even the ‘most reputable’ businesses will eventually offer a more favouravble rate to anyone willing to sell to them when they really need the forex.

No, it will not work

The post RBZ Orders Banks To Freeze EcoCash, OneMoney Agents Suspected Of Illicit Forex Deals appeared first on Techzim.

There’s been a lot of talk about the new law which will force mobile money interoperability but maybe more important is the fact that the government has revealed that it is working on a new national payment switch.

The same section of the Statutory Instrument that mandates mobile network operators to enable interoperability indicates they will do so by joining a national payment switch;

You can’t send money from EcoCash to OneMoney or Telecash just yet but laws in place will change that soon;

It shall be mandatory for every money transmission provider and mobile banking provider shall be connected to a national payment switch…

S.I 80 of 2020

Reliable sources also confirmed that the government is indeed working on such a switch and one of the first questions is whether the government will turn to Zimswitch’s solution?

Zimswitch already has experience in this regard, is partly owned by the banks and has done the bulk of the work when it comes to enabling interoperability between banks and mobile money platforms (excluding EcoCash). To our knowledge, this will not be a Zimswitch solution but a new switch from the ground up.

Potential problems

The biggest problem comes from the fact that banks, mobile money service providers and other financial institutions will have to build-out infrastructure and make their existing systems compatible with the new payment switch;

For purposes of connecting to the national payment switch in terms of subsection (1) every money transmission provider and mobile banking provider shall install, deploy or commission such infrastructure and connection protocols, credentials and documentation necessary to enable integration with any recognised payment system in terms of the National Payment System Act.

That will be irritating when you consider that as I mentioned before, Zimswitch exists already and every bank and mobile money service integrated with that platform will have to go through another integration process when they did so before.

For banks this is doubly tiring not only because of the above but also because banks were working on a bulk payments platform to replace Paynet after the banks relationship with Paynet went south last year. To our knowledge that hasn’t materialised and now banks will have to plan integration with this switch as well. Far from convenient…

EcoCash…

To make matters worse, EcoCash has also become a quasi-switch in itself due to the fact that they have independently set up connections with banks and merchants separately.

The idea of Interoperability has never been too attractive to EcoCash. This was the case to the extent that Econet (now Cassava) made it possible for NetOne and Telecel subscribers to register for EcoCash and marketed that as interoperability.

Ultimately, it’s hard to see how EcoCash will avoid interoperability now that the government is mandating that everyone be a part of this switch that they are creating but I would not be surprised if they try to do so.

How will the new switch work?

From the SI issued out here’s what we know thus far regarding the switch in development;

• There will be minimum and maximum transaction limits determined by banks and mobile money service providers;
• The switch will have daily, weekly and monthly transaction limits;
• banks and mobile money operators will be able to suspend or ban users from transacting;
• RBZ will have real-time read-only access to all transactions done via the national switch;
• Banks and mobile money providers will only be allowed to review charges with permission from the RBZ;

Finally, we are not yet sure when this switch wll actually be deployed and started working. All we know is that its in the works and the government intends to roll it out as soon as possible.

The post Government Is Working On A “National Payment Switch” – Is That Necessary? appeared first on Techzim.

Another day another confusing decision by the RBZ… The central bank has directed EcoCash and other mobile money service providers (think OneMoney, Telecash & MyCash) to freeze accounts belonging to agents with transaction activity above ZW$100 000.

Whilst at this point its fair to say we have become accustomed to such weird declarations and laws coming from the central bank, I’ll go on a limb to say this is one of the most senseless decisions they’ve made in a while.

ZW$100 000 amounts to around US$2000 according to the current parallel market rates. That is pocket change for agents who you expect interface with hundreds if not thousands of consumers per month.

Even going by the official interbank rate – which is pointless since agents don’t get money at that rate- ZW$100 000 still amounts to just US$4000. Cashing out anything above this threshold will mean an agent sees their account being frozen.

This is probematic because this means agents are no longer incentivised to facilitate more transactions and will make less on commission as a result. Less economic activity doesn’t sound like the solution to Zimbabwe’s turmoil.

EcoCash’s statement makes sure to note that they were not consulted in this directive as they obviously would not have agreed to such a directive which not only affects their business but also affects agents and consumers who will have less agents to offer cash out or cash in services because most will simply be banned due to this directive.

Let’s talk about that national switch for a moment

We recently wrote an article on the new national payment switch that the government is working on. One of the things we know about the switch is that the RBZ will have real-time access to monitor transactions and if their motivation for that is so that they can dish out such directives and enforce them more freely then we’re in trouble.

The post RBZ Freezes EcoCash Agent Accounts That Handle Above ZW$100 000 Per Month – Here’s Why That’s Dumb appeared first on Techzim.

RBZ has announced when the $10 & $20 notes will be coming into circulation.

$10 notes will come into on Tuesday 19 May with the $20 notes to follow soon after – RBZ says these will be available “by the first week of June”.

Alongside this announcement was another – withdrawal limits have been raised from ZW$300 to ZW$1000 per week. The new limit will be effected on the 19th – the same day new notes are availed.

Just for good measure the RBZ also mentioned that they will not tolerate “the abuse of currency and will deal decisively with any such abuses”… We’ll see.

The post RBZ: $10 Notes Coming Into Circulation Next Week. $20 Notes To Follow appeared first on Techzim.

EcoCash’s war against the Reserve Bank Of Zim appears to be raging on. The Financial Intelligence Unit issued a directive to Steward Bank earlier on today placing some limitations on EcoCash’s Trust account (think of it as the main account for EcoCash).

The directive by the RBZ reads:

Restriction of payments into Ecocash Mobile Money Trust MMT) Account

1. We understand Steward Bank holds or manages Mobile Money Trust (MMT) account for Ecocash (Private) Limited.

2. We have noted rampant abuse of the mobile money platforms for purposes of illicit foreign currency dealings and money laundering. We have noted huge daily inflows into the MMT account, without any apparent underlying business rationale.

3. We have directed mobile money service providers to undertake an agent re-licencing and KYC enhancement exercise to ensure that only bonafide entities are allowed to continue transacting on the respective mobile money platforms.

4. Pending completion of such a KYC enhancement and re-licensing exercise by the mobile money service providers, banks shall, with immediate effect, implement the following measures in respect of MMT accounts:

(a) the bank shall not receive or process any payment into the MMT account from a third party, i.e. a person/entity who is not an account-holder with the bank;
(b) a customer of the bank shall only be allowed to pay into the Ecocash MMT account, funds not exceeding ZW$100,000 per month (in line with the agent/bulk payer monthly limits currently in force);
(c) Ecocash shall, from time-to-time, provide the bank with lists and details of its agents who would have undergone the re-licensing exercise, and who shall be allowed to transact at higher limits, as shall be approved by the Reserve Bank of Zimbabwe, acting in consultation with the FIU;
(d)the bank shall exercise enhanced due diligence to satisfy itself as to the purpose of any payment into the MMT account and report any suspicious transactions.

5. The above restrictions shall not apply to Ecocash agents/bulk payers who fall into the following categories, whose transaction limits shall continue to be managed by Ecocash, as per currently approved thresholds:

* Banking institutions;

* Bureaux de change;

* Listed companies;

* International Organizations;

* Microfinance institutions; and

* Government and quasi-government institutions.

6. Steward Bank shall provide the FIU with daily returns of all funds deposited into the MMT account.

RBZ Directive

The post Steward Bank Roped Into EcoCash & RBZ Fight appeared first on Techzim.

It’s been a scandalous month for the Reserve Bank and mobile money service providers with EcoCash at the centre of the Central Bank’s dart board.

Background…

The economy has been spiralling wildly and the Reserve Bank believes the fault lies with mobile money services. This thinking is what led the Central Bank to issue out a directive that forces mobile money platforms to limit agent transaction to 100k/month.

EcoCash fought back and said that the 100k threshold was insignificant and would result in the incapacitation of thousands of agents which by extension would threaten the economy and livelihoods of ordinary Zimbabweans.

RBZ and FIU doubled down – choosing to fine EcoCash and Cassava Smartech officials for i) disclosing information they were not supposed to, ii) failing to comply with the initial directive, iii) failing to provide KYC details when asked to do so and iv) failure to report suspicious transactions.

Last week, Mangudya then went on an “interesting rant” saying there is economic warfare and every time the government does something to fix things there is “asymmetric economi warfare” – EcoCash and agents usuing it contributing to that issue.

What now?

Yesterday Mangudya was back on wax speaking about mobile money and as ever he had some interesting things to say:

The platforms traders are not supervised by the RBZ because we only monitor banks.

So, from the time the money leaves the bank into these agent lines, we lose oversight and in the process, most shocks causing the rates to jump are emanating from these platforms [mobile money platforms], hence the plans to bring them under scrutiny.

John Mangudya – RBZ Governor

So Mangudya says the RBZ will continue to monitor mobile money platforms pretty closely which in and of itself is not necessarily a bad thing. Important to note however is the fact that since the directive placing a threshold on agents was effected rates have not slowed down. One could argue that the opposite has happened.

Whilst EcoCash is not a bed of roses suggesting that it is behind the devaluation of the Zimbabwean dollar is clutching at straws in my humble opinion.

It’s time for a switch…

The fact that Mangudya alluded to the RBZ not being in control as probably his way of preparing the nation for the national switch that is in dveelopment.

The way I see it, the RBZ governor has said that the problem is that they don’t have full access and when the national switch is announced/launched one of the highlighted features will be the fact that authorities will be able to monitor everything with this new switch.

A dash of hypocrisy

Mangudya also hit out at currency dealers for dictating currency exchange rates randomly. This is laughable since on 3 separate occasions the Central Bank has also dictated exchange rates – first setting the USD-Bond rate at 1:1 and then subsequently to 1:3 and most recently 1:25.

All these rates are not a true reflection of the rate and the RBZ has admitted as much before. When the RBZ and Ministry of Finance launched the Reuters Interbank platform in March the two authorities stated the following:

This platform will allow foreign exchange to be traded freely amongst the banks and permit a true market exchange rate to be determined.

Two weeks after saying this the RBZ hit a u-turn and said the exchange rate would now be placed at 1:25 as part of COVID-19 response measures. This ultimately leaves the question who are the real economic saboteurs? Mobile money agents or the Central Bank?

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3 weeks ago, the Reserve Bank issued a directive ordering mobile money operators to ban agents that were transacting above a threshold of ZW$100 000. After effecting the ban EcoCash would have to register once again to meet certain KYC demands.

EcoCash responded by filing an urgent chamber application to the high court seeking the reversal of the RBZ’s directive. Simply put. EcoCash was saying the directive was unlawful because the RBZ did not consult them beforehand and the impact of the directive on agents and the country’s economy would be negative.

There has been some delays in getting an outcome from the urgent chamber application but earlier today the High Court rejected EcoCash’s application.

After EcoCash filed this application, the RBZ fired back on the basis of the following five points:

1. Since EcoCash filed the chamber application after complying with the directive, RBZ argues the issue wasn’t urgent. RBZ also says the issue wasn’t urgent because EcoCash only filed the urgent chamber application on the 7th of May – 3 days after receiving the directive;
2. EcoCash failed to include the director of the Financial Intelligence Unit;
3. EcoCash doesn’t have the right to institute such an application;
4. EcoCash sought interim relief which was similar to the final order they were asking for;
5. EcoCash cannot prohibit an act carried out by operation of law

Justice Chinamora gave out his ruling after breaking down all five points

The issue of urgency

Following the RBZs stance after EcoCash had filed the urgent chamber application they highlighted the following; They complied with the directive so as to avoid legal trouble that would come with refusing. EcoCash’s position was to comply with the directive issued in terms of law and then challenge it afterwards.

EcoCash also highlighted that building their agent network had taken 9 years and starting from scratch would be expensive.

Lastly they also argued that the affected agents were not heard before the directive was issued.

The verdict: Justice Chinamora said EcoCash was right in complying and then challenging afterwards and accepted the mobile money platform’s stance that this was still urgent

EcoCash’s failure to cite Financial Intelligence Unit

The RBZ argues that EcoCash failed to cite the Financial Intelligence Unit and its Director-General who actually issued out the directive and should have therefore been a part of the proceedings.

Verdict: Justice Chinamora noted that a case cannot be dismissed because of non-joinder i.e the failure to cite an interested party

EcoCash has no right to issue such an application

RBZ argued that EcoCash has no standing to seek to enforce the rights of its numerous agents who themselves had not moved to advance their cause before the court. Simply put, the RBZ was arguing that they cannot understand why EcoCash is arguing on behalf of the agents and instead of protecting agents EcoCash is actually protecting its own interests.

EcoCash’s representatives argued that the agents are a key part of the EcoCash platform and closure of agent accounts resulted in their desire to prohibit such a move.

Another reason why EcoCash felt the need to issue out the application is because the agents in question wanted to sue the mobile money platform.

Verdict: Justice Chinamora supported the RBZs notion citing that, “EcoCash owns the platform while the agents enjoy the right of use of the platform as long as the applicant receives its fee per transaction.“. The judge therefore echoed the RBZ in that EcoCash had no right to issue such an application.

While the applicant [EcoCash] might feel passionately about the financial strain occasioned by the Directive, it is not the kind of interest that can found locus standi* for the applicant at law

Justice Chinamora

*Locus standi – the right or capacity to bring an action or to appear in a court.

The judge mentioned that EcoCash’s Agent T&Cs cite agents as independent contractors. He then asked why EcoCash should litigate on behalf of the agents if they are independent contractors?

In addition to that, Justice Chinamora highlighted yet another section of the T&Cs which outlines that agents will comply with all laws at their own cost. The judge said the directive issued out by the RBZ called for the closure of agent accounts because they were failing to comply with the law. This means affected agents should be the ones to seek application of the reversal of this order.

Lastly, the judge said Eddie Chibi’s affidavit in their urgent application was effective an own goal which “fortified” Justice Chinamora’s view that EcoCash had no right to issue the application.

Seeking interim relief for similar to the outcome the RBZ was asking for

The RBZ argued that EcoCash in their urgent chamber application sought interim relief that would give their agents access to continue operating. This is ultimately the same verdict EcoCash is seeking and therefore the interim relief and outcome are identical.

Verdict: Justice Chinamora explained that a certain section of the urgent chamber application requests that the Court prohibit the RBZ from enforcing the directive they issued banning agents. The problem is that is followed up by another section which asks the court “to uplift all restrictions imposed on the accessibility of the EcoCash system”.

The problem here is that the directive seeks to curtail abuse of agent accounts and so if the judge were to grant interim relief the agents would get access to their accounts and start using them. Chinamora says such a ruling would mean EcoCash has gotten effective protection before proving its case.

Court cannot prohibit a lawful act

The RBZ argued that if the High Court granted EcoCash the interim relief they sought amounts to preventing the RBZ from carrying out its duties.

Verdict: Justice Chinamora said the RBZ was right to hold this view and that EcoCash should challenge the directive by applying for it to be reviewed. The Justice said EcoCash chose the wrong method to challenge the directive by the RBZ and likened it to entering “through the back door and not the front door”.

Ultimately the judge dismissed EcoCash’s urgent chamber application and order that they pay the cost of the lawsuit.

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