In a sudden and a hugely ill advised move, the government yesterday announced that they were suspending all mobile money transactions with immediate effect. As expected, EcoCash has responded.
Here is their statement to their subscribers:
Dear Valued Customers,
We are aware of a statement purporting to have been issued by the Secretary for Information, Publicity and Broadcasting Services that purports to ban all mobile money transactions.
However, EcoCash is regulated by the Reserve Bank of Zimbabwe and would naturally expect a directive of that nature and significance to be communicated by the Reserve Bank of Zimbabwe.
We urge all Ecocash users who exceed 10 million Zimbabweans, the majority of whom do not have bank accounts, to remain calm and to continue to do your lawful transactions as usual. Should there be any changes, we shall give you adequate notice as required by law.
DIAL *151# Live life the EcoCash way Cassava
We of course expect EcoCash and possible a host of businesses and individuals to take the government to court over this madness.
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Nick Mangwana, the Permanent Secretary in the Mimnistry of Information is the one whose signature was on the ridiculous statement that announced the ban on mobile money. Here is him tripping over his words to justify the move:
Mangwana is not the first government official to bring up some argument on EcoCash and mobile money not being regulated by the central bank but by the telecoms regulator POTRAZ. This is false. EcoCash is licensed and regulated by the Reserve Bank of Zimbabwe.
It’s all besides the point even. The transaction landscape is changing globally more so in Zimbabwe where government policy has brought in cashlessness albeit unintentionally. Consumers can’t be forced to use banks that have shunned them for years when the technology they hold in their hands gives them much more choice.
Mangwana knows it’s silly
The sad reality is that Mangwana is just towing the party line. He absolutely knows this is ridiculous. He is that smart, we all know that. Perhaps the best he can do is to live with his decision to be hatchet man for government and he tries not to give explanations. His explanations are not convincing anyone, even himself.
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The government last night through Information Secretary Nick Mangwana decided to suspend all forms of mobile money. Now the reasons behind that decision aside, what does it mean for all of us who rely on EcoCash or OneMoney?
A lot of the people were unbanked before the advent of mobile money. Many relied on physical currency to buy goods and services. The cash crisis Zimbabwe endures means that physical money is hard to come by.
Mobile money brought the convenience of a transaction to being a couple of button presses away. In stores, on the streets, and even from home or wherever anyone might be. People were able to go beyond what they could because the facility to start it all was in their mobile phones.
The reach of banking services was extended. All it took to start a business, to receive or send money was a cellphone and a SIM card.
Now I am not saying the system doesn’t come with its problems, service gets disrupted or goes down altogether. It’s unfortunate, but it is all part of any system used by millions of people. It should be said that the operators have usually able to get the system back up, in part or completely.
The operators even made improvements on the service opening it up to all sorts of payments. Electricity, school fees, airtime and other payments could now be done from wherever.
What makes it worse is that the Government encouraged us to go cashless and to utilise facilities like mobile money to ease banknote dependency. The impression that everyone received was that this was to become one of the key facets our economy was to run on.
Ok… So what now?
Well the panic it has caused can’t be taken back. Zimbabweans are more on alert than usual. We had very little financial security to begin with. We have been standing on uncertain ground for what seems like an age. I can’t find the right metaphor or term to quite caption what it feels like.
What happens to the informal traders? The quarantine left them without a means to earn, and then after that, they get back to work they get this?
What about all those who don’t have a bank account and have all their money in a mobile wallet?
What about all the businesses who have the entire business models centred around mobile money?
These are among the things I thought would have been weighed before coming to the announcement we received last night.
I can’t even begin to imagine what other Zimbabweans in a number of different situations must be thinking or feeling.
The Reserve Bank (at the time of writing) hasn’t yet made a comment or issued any statement. All interest parties, companies and operators will be sure to contest this no matter what the RBZ says. Econet’s statement this morning alluded to that.
Now we must wait… again… Uncertain of how this will all unfold.
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Of course we will keep going to town about the most stupid decision announced by the Zimbabwean government ever. Scrutinising the statement that announced the suspension of all mobile money and the Zimbabwe Stock Exchange word for word will give us volumes upon volumes to criticise. I’ll try to pick a few words to illustrate:
Prudent
The statement starts thus:
Government has, with immediate effect, undertaken a series of prudent and coordinated interventions
I think the prudent thing for me to do is to let the dictionary respond to Nick Mangwana’s statement. Here is the definition of the word prudent:
adjective acting with or showing care and thought for the future
Well, according to statistics from the Reserve Bank of Zimbabwe, 85% of all transactions happen on mobile. Even more interesting is that in terms of the value of the transactions, mobile represents a far less percentage of 22%.
What this means is that mobile is being used for the everyday small transactions mostly by individuals. In fact when we use the fourth quarter 2019 reports from the RBZ we realise that the average transaction value on mobile was a mere ZW$98. Using the official interbank foreign currency rate at that time, this average is less than USD6.
Do you see any prudence in shutting down 85% of all transactions most of which are by individuals in the midst of a ruthless pandemic?
Shut, locked and sealed for business
Do you remember the mantra, “Zimbabwe is open for business?” I am sad to say that I was right in saying that declaring those words was not equal to a national vision. Suspending mobile money in and of itself is a definite closed for business stance. However, these guys are not doing anything in half measures, they had to shut the stock exchange as well:
Concurrently, the measures will also include the suspension of all trading on the Zimbabwe Stock Exchange.
Whenever the president talked about being open for business it was almost always in relation to attracting foreign investment into the country. What serious investor comes into a country that shuts down the major liberal capital market like the stock exchange until further notice to carry out a witch hunt?
The purpose of a thing
Mangwana’s statement says:
These measures are to subsist until such time that the mobile money platforms have been reformed to their original purpose and all the current phantom rates of exchange have converged into one genuine rate that is determined by market forces under the Foreign Currency Auction System which was launched by the Reserve Bank of Zimbabwe on 23rd June 2020.
Author’s emphasis
The first thing I will pick from this is his reference to some kind of a reformation of mobile money to its original purpose. That is ludicrous. Who determines the purpose of a thing? The purpose of EcoCash is defined by two parties. The first to define it is EcoCash itself and its creators. Their website says:
EcoCash is an innovative mobile payment solution that enables customers to complete financial transactions directly from their mobile phone! Customers can send money to loved ones, buy airtime, pay for goods and services and much more.
Second group that determines what EcoCash is is its users. Due to the failure of the government that Mangwana represents, EcoCash’s users – citizens of Zimbabwe have decided that EcoCash is cash. They didn’t want to do that. In fact they prefer cash as evidenced by long bank queues to withdraw it as well as the premiums they pay some unscrupulous but enterprising folks who sell cash. However, much as they love cash, it is not available and therefore they knighted EcoCash to be cash.
Purpose cannot be defined by the government outside of their licensing framework. Last I checked, EcoCash is licensed to carry out some of what Mangwana accuses them of doing for example this:
Acting as banks outside the purpose for which they were originally licensed, as non-banking financial institutions. This includes, in the particular case of Ecocash, holding well in excess of ZWL$8 billion…
Umm, Nick, EcoCash is licensed to take deposits.
The one, the only rate
I will use the same quote I used above and just emphasise a different portion:
These measures are to subsist until such time that the mobile money platforms have been reformed to their original purpose and all the current phantom rates of exchange have converged into one genuine rate that is determined by market forces under the Foreign Currency Auction System which was launched by the Reserve Bank of Zimbabwe on 23rd June 2020.
Author’s emphasis
Does Mangwana realise that the portion I highlighted above is self contradicting? The auction that he refers to is a ‘Dutch action‘ which allocates forex to the bidders at their bid level starting with the highest bidder.
This means by design, there is no one official rate. Last Tuesday we were told that the highest bid received was for a USD to ZW$ rate of 1:100. Those bidders were given forex by the RBZ at that rate and other bidders on the same day were given some forex at 1:25.5 (the lowest bid). When they then averaged things out the ‘official rate’ became 57. I’m not one to use big words but if I was, I would call the rate of 57 a ‘phantom rate.’
Do you see how confusing this is? If Tinashe’s supermarket bid 100 to get forex to import stuff for resale, how then can Tinashe’s supermarket be asked to price its goods based on a very low average exchange rate of 57? In primary school taiti “it can’t.” By being a Dutch auction determined rate, the official forex rate is itself self-defeating. So no, Mr. Mangwana, there is no one ‘genuine rate’ to converge to.
Market forces what art thou?
I will again take from the same portion I used twice above:
…one genuine rate that is determined by market forces under the Foreign Currency Auction System which was launched by the Reserve Bank of Zimbabwe on 23rd June 2020.
Author’s emphasis
By market forces does Mangwana mean price fixing by a handful of entities (real and imagined) that participated in the inaugural auction on Tuesday? Here is a telling image:
92 entities who bid across such a wide spectrum determine the official rate
Mangwana’s one genuine rate is determined by just 92 entities most of which did not even value the forex at the resultant rate. Above 30% (at least) of them bid higher and an equal percentage bid lower. The government should just call it the official rate and leave it at such. To call it market determined is a stretch.
The real market rate is one that exists on the streets. The street markets are open to all, not just those who can afford USD50,000 as Mangwana’s does. The players on the street market are numerous and hence their average transactions result in a truer market determination of the value of local currency than just 92 rich entities.
I’m a skeptic and I would bet on my skepticism that some of the 92 entities are non existent bidders that were added by the authorities to make sure the rate did not go ‘out of control.’ BUT let me veer out of conspiracy theories. This is a domain for Mangwana and the government he represents. You remember Mangudya talking about demons, prayers, guerrilla warfare, Sodom and Gomorrah?
We are at war?
I was worried by this phrase used by the government:
…prevent any collateral damage that these interventions may cause to the innocent…
Author’s emphasis
The phrase collateral damage is very telling. It tells me that this move sounds more military than civilian. It tells me how my government sees my life and my livelihood: both are just collateral damage. This is wrong. Civilian life should not be collateral damage but it should be the absolute responsibility for a government.
Miti- what?
The full version of the paragraph I quoted above:
Government will concurrently ensure that prudent measures are also put in place to mitigate and prevent any collateral damage that these interventions may cause to the innocent transacting public who were using these platforms.
Promises, promises. Our government is fond of making grand promises it cannot nor intends to keep. In April the government announced they would give ZW$200 per household per month to 3 million households starting in April. At the time that money was equivalent to USD4 per household. It never came and was raised (yes the promised money that never came had an increment) in May to ZW$300 still worth just below USD6. Today families have not received any of it and the promised relief has been deteriorated to USD3 per month by the crash of the local currency. Still it’s just a promise. Some have received ‘something’ though. I know of a case where a family received ZW$63 (USD0.63)!
If they failed at the above, how on earth can they mitigate against locking up people’s little monies in mobile wallets and getting business to a standstill?
A lot of words
All of the above words are from the preamble to the statement. The government goes on to level some 15 allegations against EcoCash particularly. Some of the allegations sound criminal in nature, most of them are just verbose statements that mean nothing in context. I will not go into those because those allegations are preceded by this declaration:
Government is in possession of impeccable intelligence which constitutes a prima facie case
Who am I to argue against whatever ‘prima facie’ is?
Fake counters and the Old Mutual Implied Rate
This bit is worrying in how it reveals the levels of misinformation the government suffers from:
The impact is exacerbated by the existence of fake counters on the Zimbabwe Stock Exchange, which is epitomized by the so-called Old Mutual Implied Exchange Rate (OMIR).
I had a conversation with some government guy, political guy just over a month ago. I was trying to explain to him how the restrictions on transactions were hurting businesses especially small ones and the average person. The guy then said to me that the real problem was Old Mutual. I was like ‘huh?’
Guy said, “If only you understood what the Old Mutual Implied Rate is…” Well I do understand what it is and I told him what it is:
Old Mutual is a multinational company traded on the Zimbabwe Stock Exchange as well as the Johannesburg Stock Exchnage in South Africa and the London Stock Exchange. When you buy one share of this company on any of the markets it is perfectly equal to a share bought on any of the others. Old Mutual is Old Mutual.
Because there is a lot of interference in the way local Zim currency is valued, clever people just started to estimate the true value of the local currency using how much Old Mutual shares are worth on the different exchanges. Simple example: If a piece of gold sells for ZW$100 locally and for USD1 in New York. You can use that to imply an exchange rate between the USD and ZW$ of 1:100.
So you see, the OMIR is not a real thing, it is just the market’s attempt to place a value on the local currency. This rate was officially used quite a lot in 2008. Old Mutual does not control this in any way. Targeting Old Mutual is pitifully ill informed.
On whose authority?
Mangwana’s statement ends this way:
Statement issued by N Mangwana Secretary for Information, Publicity and Broadcasting Services
Mangwana’s statement doesn’t specify in any part the authority under which it was issued. No wonder EcoCash has told its customers to keep calm and keep transacting. The document has no legal basis. Mangwana has no authority to issue executive orders of this nature.
Even the president doesn’t. When the president does stuff like that he has to site the Act of Parliament under which he is deriving power to act. He conveniently uses the all purposes Presidential Temporary Powers Act but still at least its an Act of Parliament.
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Yesterday the government through Nick Mangwana issued a statement declaring that mobile money was suspended with immediate effect. Naturally the public wasn’t happy and all threemobiletelecommunications companies released statements to the effect that they would wait for a directive from the relevant authority.
It seems like they have revised the original plan, probably because of public outcry. The original was honestly ridiculous, it was too far-reaching and would have absolutely decimated the fragile economy. The following is the statement released by the Reserve Bank:
PRESS STATEMENT
On the Suspension of Monetary Transactions on Phone Based Mobile Money Platforms
Following the Government Press Release on the Suspension of Monetary Transactions on Mobile Based Money Platforms (One Money, MyCash, Ecocash and Telecash) dated 26 June 2020, the Reserve Bank of Zimbabwe (the Bank) wishes to advise the public as follows:
a) All mobile money agents are suspended from facilitating mobile financial transactions with immediate effect.
b) All merchant transactions are suspended except for receiving payments for goods and services as well as payment of utilities (water, power and airtime), which have been limited up to ZW$5000 per day for the convenience of the transacting public.
c) All mobile money liquidations should be done through the banking system.
d) All bulk payer transactions have been suspended with immediate effect.
These unprecedented measures have been necessitated by the need to protect consumers on mobile money platforms which have been abused by unscrupulous and unpartisan individuals and entities to create instability and inefficiencies in the economy.
Members of the public are assured that their bona-fide transactions will be processed normally.
Yesterday a colleague mentioned that they were denied using EcoCash at a service station. All other forms of payment were acceptable except EcoCash. This didn’t surprise me. First let’s make sure those who have been living under a rock are caught up:
On Friday the 26th of June 2020, the Government of Zimbabwe declared that all mobile money (of which EcoCash has 98% share of market) was suspended with immediate effect. The government then made a face saving ‘clarification’ which was that all agents had been suspended but all transactions could proceed as normal except that merchants have no other way to move money out of their merchant wallets besides transferring it into linked bank accounts.
This is a problem for EcoCash
If merchants start discouraging the use of EcoCash for purchases it’s a serious threat to EcoCash. It makes sense though that merchants would do this because of the limited flexibility they are now offered on the platform.
Suddenly EcoCash is in a position where their utility to users is now less than it was. The payments company has gone into overdrive promoting their service. They are particularly promoting liquidations unto their platform which currently due to agent suspension can only happen through moving money from bank accounts unto the mobile wallet. Here is an example of EcoCash promotional material:
EcoCash is now forced to campaign for bank account opening, this is something that they never would have done.
Sadly for EcoCash, money can now only come on to their platform through banks and therefore they now need to have as many people as possible opening bank accounts. The government really handed them one this time.
The gvt is not the biggest problem
Ultimately what poses a threat to EcoCash is EcoCash itself and the organisational culture into which the fintech was born. The Econet group (Yea Econet Wireless, Cassava…) sucks at customer service and more importantly at customer centred product design. This is what makes EcoCash vulnerable. Let’s try to trace that one out a bit:
How EcoCash won in the first place
We have documented EcoCash’s excellent strategy from the time it was founded in a write up we did two years ago. What they did well was to copy MPesa in Kenya really well and more than that, they were able to translate what they saw in Kenya to their context in Zimbabwe for example by choosing to base their service on USSD and not via SIM Toolkit.
The decisive factor however, was that Econet (at that time this was just an Econet product) understood that mobile money was a two sided market which requires figuring out the chicken and egg problem effectively. They went all out to recruit agents that would facilitate liquidations onto and off the mobile money platform. At launch, the service already had a very strong network of agents which gave it utility for internal remittances immediately.
EcoCash never rested on their laurels, they kept expanding their agent footprint. They started recruiting merchants too: businesses that would receive payments via the mobile money service. As users saw utility in the services, they signed up in droves. The more users signed up, the more merchants and agents were attracted to the service creating a vicious cycle. That, ladies and gentlemen is what they call network effects.
Markets with network effects are generally ‘winner takes all’ kind of markets. Indeed, EcoCash took it all. They dominate the space. Their dominance made them refuse to compromise when they dictated negotiated terms with banks to integrate with their system. Some banks held out for a bit but the service was just too dominant in the retail and peer to peer payments space that literally all banks capitulated and accepted the EcoCash terms.
Customer as a trapped victim
In the USA Facebook is a bigger deal than it is here. The social networking site is used by everyone and their dog kind of. Facebook the company is hated though. I have heard a lot of folks from the USA saying they were going to leave Facebook but then they never do. Reason: network effects. When everyone is on there, moving away means you are cut off.
That is the beauty of network effects but that is also the problem. Network effects make customers stick with a business because they can’t leave not because they want to stay. I believe that is the case with EcoCash and Econet in general. Their customers really love to hate them but they feel they need them.
It sounds like an enviable position right? To be needed, not just wanted. On the internet though where competition is unlimited, the only solid way to win is to be wanted. This is why Econet has always struggled with products that inherently need to have internet assumptions. The group is excellent at leveraging licenses and such but they are not at all good at actually building products.
What happens when they fall out of favour with the guy who dishes out licenses as has happened with EcoCash? They need to fall on customer choice, customers that are fans who believe that EcoCash just works. Do they have such customers though? I do not know if they do.
The reason why some merchants are declining EcoCash is evidence that the EcoCash customers themselves are not raving fans that will go to the next store if they can’t pay using their beloved EcoCash.
Put another way: if the only way one can fund their EcoCash wallet besides being sent money by someone else is through the bank, why should they move money to EcoCash since they can just make payments directly from their bank account? Is EcoCash cheaper? Is it faster? Is it simpler? No. No. No. There lies the problem.
Where is the evidence?
What’s the evidence that EcoCash is not customer centric? Well, their user experience sucks. It sucked and then they did an upgrade in November last year and it sucked even more!
Another example? Customers have been asking for an easy way to get statements for a very long time. EcoCash never thought it important to make this a feature even on their mobile app (supposing that USSD is too constrained). Worse: when an entrepreneur developed Ecoledger, an app that made it possible for EcoCash customers to have statements and other pecks, EcoCash tried to tarnish the guy’s name by some unfortunate social media campaign.
Business users of EcoCash have to request a statement whenever they want. In fact, no, not whenever they want! We are one such business that was told that we had requested our statement too frequently at some point. Recently, after emailing the same place we used to get statements, we were told to visit an Econet shop. Meanwhile, EcoCash is running a campaign where they are telling people to stay at home and transact remotely to keep from COVID 19! This is the problem: the business is not inherently designed with the customer at the centre.
This is why merchants are quick to say no to EcoCash. To merchants, if transacting on EcoCash directly is no longer possible and they have to send money to the bank first why should they accept money into EcoCash in the first place? They don’t want to keep begging to get their statement. There are zero tools for businesses. Why? Because Econet is not a builder of products, they are a leverager of network effects and licences.
Why the suspension of agents is affecting EcoCash
Yes the government has suspended mobile money agent transactions but that this has affected EcoCash is EcoCash’s fault. The fact of the matter is that for a long time now whenever a ‘cash-in’ or ‘cash-out’ transaction happened at an agent generally there wasn’t any cash that changed hands except for the few instances where the agents were selling cash. What was happening is that people were ‘hacking’ agent transactions to do business to business, business to consumer and consumer to business transactions.
If EcoCash had a product development culture that should have been a signal to them. They would have designed appropriate tools that served their customers specifically. When you find a big portion of your customers hacking your product to make it more useful it should tell you what to build for them.
Had EcoCash looked at this from a product builder perspective, they would have created new channels that served their customers separately from agent transactions that justifiably raised suspicion with regulators. As far as regulators could see, there were a lot of cash-in and cash-out transactions in an environment where there is no cash! So the authorities banned agent transactions.
This could have been different if business to business, business to consumer and consumer to business tools had been built from the ground up. EcoCash’s attempt at such was introducing what they called bulk payer lines which were not a good product at all because the lines were essentially just agent lines. That is the problem when there is no imagination for product evolution. EcoCash was happy to get their imposed tax for every transaction on their platform without thinking about improving the experience of their users.
What does all this mean?
If the moves by the government are going to affect EcoCash in any way, it’s going to be because EcoCash has not made their customers into fans. Those customers have no reason to keep on the platform if there are no network effects to keep them locked in.
EcoCash is pushing for people to open bank accounts. However, once people have bank accounts, what is the distinct thing that will make them need to move money from those accounts into EcoCash? An agent footprint is no longer a selling point and not because the government banned agents. It’s because agents don’t matter much in a cashless economy.
Right now the more important selling point is the availability of EcoCash even to the smallest merchants. Some of these very small merchants don’t have merchant accounts but use their personal wallets to accept payments. EcoCash needs to quickly build appropriate tools for these users if they want to remain relevant.
The easier thing is for them to focus on the pain of unfair treatment from government (yes it is unfair) and to conclude that it is the source of their woes. However, if they will be humble to realise that they could have preempted this predicament by proper product development and a laser focus on the customer then they can get out of this stronger.
This is not easy though. Culture is the devil.
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Yesterday Econet Wireless went dark nationwide. They seem to have restored services for calls and data. However, they are still working through issues with Ecocash airtime and bundles purchases through their USSD platforms.
NOTICE TO CUSTOMERS
Dear Valued Customer We regret to advise that you may face recharging challenges on *151# (Ecocash) or *143#. As we work to resolve please consider using physical cards. We sincerely apologise for the inconvenience this has caused. We thank you for your patience and continued support. Econet Wireless
A friend brought up a question recently, can’t a software developer at EcoCash just create a balance in their account. Then, said developer can go buy a shiny new Lamborghini Gallardo LP460? (I may be adding a bit of sweetening but you get the point).
A soccer analogy
Let us talk about soccer for a second, a game which as a stereotypical nerd I do not enjoy at all. Team A which we will call Techzim Strikers is playing Team B, Newsday F.C. As the match progresses and Newsday F.C. is losing dismally, a ball boy who is clearly a Newsday sympathizer throws in a second ball into the game. Newsday FC capitalises and scores. The referee then notices that there are now two balls being kicked around by a bunch of sweaty men instead of one and he obviously stops the game.
Just like a referee monitoring a soccer match, there are checks and balances in any banking system. The first is that there are levels of privilege to every system. This clearly was not the case a few years back when a Zimra employee just went ahead and credited a couple million dollars to himself. An employee should be protected by having limited access to the systems they operate. Notice I said the employee protected, as they are less likely to do any real harm beyond just giving in to the temptation to commit a crime that will automatically be detected a few days later.
I am a script kiddie
Say you do manage to hack in or internally create a balance. You have simply altered a display value, just like how altering the time on your watch does not make the displayed time the true one according to everyone else. There is a system of record that each transaction will either credit or debit depending on the transaction. Once you alter your displayed value according to the access credentials you have, you will have not created any actual real money.
When you transact via a digital banking platform, the system is not simply altering a figure in a couple of accounts. There are several records that a system will check to see if you have that amount of money. I am reminded of a glitch that was reporting inflated balances on the display end to the bank’s customers. Forgetting that spending money that gets credited to you even by mistake is a crime (more on this later), people hurriedly tried to spend the money but got the disappointing message, “Insufficient Funds.”
Well, our primary focus is developers and let us pretend that the system’s security is as lax as that of Zimra’s system. If a developer can go deep enough and be able to change the system of record balance, then they have created money. Well no, they have not. Even if you can change the primary system of record balance and credit money to yourself, the banking system automatically performs self-balancing using digital ledgers at the end of a predefined period. The money that came in, the money that goes out, the money in circulation and the money that is left in the system, they must all balance. Just like how our soccer match has several officials monitoring the game, there is no way that Newsday player scores the second ball without the linesman notifying the referee well beforehand.
Once a discrepancy is reported by the system the amount you created will determine what happens next. You can either be caught by other developers and internal accountants or the company will bring in a more dedicated audit team and you will have a few days to find an island where no one can get to you.
Miracle Money
In 2018, a student nurse in Gweru was sentenced to 12 years in prison after spending $54,000 that was deposited into his account by a technical glitch at CABS. His defense was that as a devout Christian who goes to a certain prophetic church, his prayers had been answered by miracle money blessings. That did not stop the Judge from sending him to jail though, with 3 years suspended on condition that he give back the house he had bought with the money.
The technical glitch came up after CABS upgraded its internal systems and a glitch reared its ugly head. The banking system was failing to correctly record figures after a bank to EcoCash wallet transfer. Since the systems are decoupled so to speak, it took a while for CABS to discover the glitch and clamp down on it, leading to the 24-year-old nurse’s arrest. Oh, and the young man had purchased two nun runner vehicles in addition to the house. Who steals money to buy two dead cars seriously? Well, the moral of the story is that even in instances where real money is involved, you will get caught, it is only a question of when.
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Econet seems to have worked out all the issues they were experiencing. Last night there was a nationwide blackout of voice and data services. Econet had last night said that their technicians were working to solve the problem. As of this morning, calls and data services were working.
They released a press statement this morning that customers may experience challenges with Ecocash airtime and bundle recharge. However, this too has been resolved:
“We apologise for the service interruption experienced on the network. Normal service has been restored. Any inconvenience caused is sincerely regretted.”
Econet Wireless
[UPDATE]
NOTICE TO CUSTOMERS
Dear Valued Customer
We are happy to announce that the technical challenges that affected service delivery on our network have now all been resolved and normal service has since been restored. We sincerely apologize for the inconvenience caused and thank you for your patience during this time, and for your continued, valued support.
Given all this, I thought it might be worth looking at how this decision should be a wake-up call or worse a call-to-arms for EcoCash.
Goodbye network effects
The important thing to note from all this is the era of network effects is over. The national switch requires EcoCash to be interoperable with the new switch. What does this mean for the laymen? Well, where you normally needed an agent to send money from EcoCash to OneMoney/Telecash you can now do so directly.
Not only is that super convenient, it also removes the need for everyone to have EcoCash which in and of itself is a big deal. You no longer need to have EcoCash because everyone else has EcoCash. We all know of at least 1 if not more people who have an Econet line because they need EcoCash.
How big of a deal with this be? Well, in the Kenyan mobile money market it didn’t bring about earth shattering change. M-Pesa who were the dominant player in that market went from 71.9% market share to 63.5% (-8.4%) in a year and a half. Devastating? Far from it, I think.
But that repeated decline is enough to wake up and force any organisation into action – worse more one that reports back to investors from time to time.
Who’s got a bad rep?
It’s hard to imagine that Econet and everything associated used to have public buy-in. Between Strive Masiyiwa saying “he believed ED is sincere” (something I believe he takes way too much stick for), EcoCash’s nightmare upgrade last year and a host of other issues, that goodwill is long gone and the underdog tag no longer applies to EcoCash.
It’s lonely at the top and at times it feels like everyone is rooting against Econet which could mean more people transitioning to OneMoney and Telecash just to spite the much maligned Econet group.
What advantages does EcoCash still have?
These two factors are enough to suggest that EcoCash will need to make their product more compelling than OneMoney and Telecash. The advantage they have is that they control the platform where their rivals are sitting on an existing platform.
Why is that important? Well, ZIPIT which enables most of the functionality is not controlled by Neither OneMoney nor Telecash. This presents a problem in that if either of the two wants to build a killer feature they are less flexible than EcoCash is.
EcoCash also has a gigantic headstart vs other mobile money operators -they have over 90% market share and volume of transactions- which I think affords them time to go to the drawing board.
Finally, the last advantage is simply the fact that EcoCash’s competitors are not notorious for innovating or coming up with compelling products. In fact many of the times, they’ve followed in EcoCash’s footsteps which makes for a pretty boring mobile money market where fierce competition is the stuff we relegate to our dreams.
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The Reserve Bank this afternoon issued a statement that made Zimswitch the national payment switch. This means that EcoCash will be relegated to just being wallet and will have to use Zimswitch as the universal transaction hub. Now, as more information about this comes out, and we see how EcoCash responds to this. Let’s have a little refresher on what Zimswitch is, how it came about and what they do.
I’m sure many of you are already familiar with Zimswitch and their services. But with every new directive issued, we seem to have to brush up on what the new thing that will be talked about, is all about.
What is ZIMSWITCH?
Founded in 1994 as a collaboration between Beverley, Barclays, CABS, Founder’s Building Society, Stanbic, and ZimBank (ZB Bank) (CBZ and Time Bank joined in 1995 and 1997 respectively). Zimswitch Technologies Private Limited is Zimbabwe’s sole electronic funds switch and clearing house.
They process domestic card based ATM (Automated Teller Machine), POS (Point of Sale) and EFT (Electronic Funds Transfer).
Timeline:
1994 Founding of Zimswitch
1995 Processing of the first Zimswitch transaction
1996 The first Zimswitch POS transaction is processed
2001 Incorporated as Zimswitch Technologies Private Limited
2006 Zimswitch makes the move to Postilion switch for greater efficiency
2012 Introduced credit push to bank and credit push to mobile also known as ZIPIT
There are over 400 Zimswitch enabled ATMs countywide
There are over 100 000 Zimswitch Point of sale machines nationwide.
ZIPIT (Zimswitch Instant Payment Interchanger Technology) any mobile user on any network with a bank account can send and receive money using ZIPIT from any other bank provided both banks are on ZIPIT.
RBZ announced that Zimswitch is now Zimbabwe’s national payment switch and that all monetary service providers are directed to integrate with it. What does this mean to me the customer?
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Yes EcoCash is too dominant. It had above 98% share of all mobile money transactions in the first quarter of 2020 which translates to above 80% of all transactions in Zimbabwe period. The word monopoly is a fair one.
The RBZ wants to do something about that
Yesterday, Zimbabwe’s central bank issued a communique which declared that the card switching platform, Zimswitch had been knighted ‘the national payments switch’ that every player in the payments space must connect to.
On paper, this development curtails EcoCash’s power in the consumer payments space. I say on paper because consumer behavior change does not merely come because a pronouncement has been made or that technology has been deployed to make abc possible.
EcoCash as target
There is no doubt that this announcement by the Reserve Bank of Zimbabwe is targeted at EcoCash. Literally every bank and the other mobile money solutions are already on Zimswitch. EcoCash had no reason to be on Zimswitch. Strategically, their refusal to be on Zimswitch makes sense. Joining Zimswitch would just weaken their position in the market while propping up competitors.
To be clear: OneMoney and Telecash being on Zimswitch is not because these two mobile money platforms are ‘more reasonable.’ They joined Zimswitch because they didn’t have any choice. They were too small and did not have a merchant network as strong as EcoCash’s so they needed Zimswitch. A lot of times people fault EcoCash for not joining Zimswitch but the fact of the matter is that EcoCash would have been stupid to join Zimswitch.
So, EcoCash was not motivated to join others and the central bank sought to do something about it. Now, here we are.
Is this good for the ecosystem?
Well, is having a dominant player controlling more than 80% of consumer transactions a good thing? The simple answer is no. In all monopoly situations, the first thing to fly out the door generally is customer focus and innovation. Indeed EcoCash is a poster child for this.
OK so potentially reducing the barrier to leaving the EcoCash network is good for consumers. Is making this reality through decrees like the one issued yesterday the way to do it? No!
We have a monster problem, let’s create a bigger one
Zimswitch is the rival platform to EcoCash. It is the Mastercard to EcoCash being Visa. It therefore doesn’t make sense for RBZ to attempt to weaken EcoCash by making Zimnswitch effectively the end all and be all when it comes payments.
This is actually not a good move at all. One company can’t be favoured with monopoly status just so as to neutralise another monopoly. Contrary to beliefs out there, Zimswitch is a private business owned by private shareholders that include some of the banks. If the RBZ wanted to create a primitive base switch that everyone else connects to then they should have created it themselves not the rob Peter to pay Paul type move they played here.
Perhaps it doesn’t matter much
Monopolies are a problem mostly because they don’t result in true market/price efficiency. Services become more expensive than what the demand and supply curves would otherwise suggest. Is there a risk of transactions becoming expensive because of Zimswitch?
I don’t think that risk exists because making inter-platform transactions expensive would be self defeating for Zimswitch. If moving money from EcoCash to OneMoney is too expensive for example then customers will just stay on their respective networks i.e EcoCash customers will continue to transact exclusively on the EcoCash platform (which is extensive enough on its own). If that happens then Zimswitch will still get nothing.
So where is the problem?
Zimswitch is a private business that is run for profit. I think it is not fair that the regulator just picked one platform over the other to make payments interoperable. As a point of principle I object to the RBZ’s move here. Even bureaucratic standards were not met. The central bank did not call for tenders for the provision of a national payments switch.
If you talk to Zimswitch they will tell you that they are not in competition with EcoCash or anyone really, they are only there to facilitate interoperabilty. Perhaps that is true at some vague idealistic level but that doesn’t change the fact that Zimswitch and EcoCash are the two rival payments platforms in Zimbabwe. Addressing the dominance of one of them by just transferring the dominance to the other doesn’t seem like the right thing to do.
Innovation at Zimswitch?
I have accused EcoCash of not being innovative before. That criticism extends to Zimswitch as well. Their V Payments solution for internet payments for example is terrible and unusable. As a result you can’t use local cards to pay for stuff on the web. There hasn’t been much movement from the company over these past two decades. Just like EcoCash they were happy just getting their tax out of every transaction switched through them. ZIPIT is the exception that proves the rule.
Now it’s going to be worse because they have been handed a victory. The fact of the matter is that before mobile money came on the scene banks and Zimswitch were resigned to the idea that banking and electronic transactions were for an elite class. The fear I have is that this is still the attitude of the new Goliath that the RBZ has knighted.
Should the RBZ have set up the base switch themselves?
Frankly I don’t trust the Reserve Bank of Zimbabwe or the government in general. They would have thought the switch was just a cash cow and they would never have built it with the right capacity. The central bank has proven its failure too often and we don’t want them anywhere near the direct operation of one more important thing.
So what should have been done?
The model should have been closer to the one developed in India where the National Payments Corporation of India (NPCI) is a non profit payments infrastructure company set up by the Indian central bank. This company has a broad based shareholding which represents key players in the payments space. NPCI deploys agnostic solutions that have made India one of the leaders in payments innovation in the world.
Such type of organisation is not new to Zimbabwe. The Zimbabwe Internet Service Providers Association (ZISPA) is an example of this kind of industry vehicle. It is a non profit organisation set up by ISPs. From the ZISPA website:
ZISPA’s main activities are:
Management of the CO.ZW domain registry on behalf of the Zimbabwe Internet community
Operation of the Zimbabwe Internet Exchange (ZINX)
Do you see that? ZISPA manages core infrastructure (ZINX) that ISPs share to be able to ‘speak’ to each other much like the payments switch we are talking about. Here is how ZISPA describes it:
ZISPA operates ZINX, the Zimbabwe Internet Exchange, which provides for peering between local Internet Service Providers. This enables them to exchange traffic directly rather than routing it through third parties which may charge for the service.
This arrangement would have made better sense not playing musical chairs with monopolies like the RBZ has done.
The title of this article is a paraphrase of part of the statement issued by ZANU PF today commenting on the economy. Here is the actual excerpt:
ZANU PF also wishes to commend government for the decision that it has taken to allow mobile money operators to be overseen by the Reserve Bank of Zimbabwe through the Zim-Switch platform.
As a matter of fact, ZANU PF considers this decision to be a masterstroke which will give an invisible hand to the government to manage and direct the country towards a common good.
The channelling of all mobile money transactions through this platform is the right thing to do and will, in the end, restore stability and sanity to the banking sector.
Mobile money transaction platforms had become a law unto themselves making rules for banks and others to comply with.
ZANU PF thus supports the measures that the government has taken in this regard as it considers them necessary medicine to cure our economy which is under siege.
The measures will no doubt in due course become a sound basis for strategic sustainable nation-building, a platform for robust employment creation for our people, stabilisation of the exchange rate and resuscitation of our key productive sectors.
The statement was issued by former minister of finance (well and other ministries really), Patrick Chinamasa in his capacity as the Acting ZANU PF Secretary for Information. It was mainly targeted at Old Mutual. ZANU PF is saying Old Mutual must de-list from the Zimbabwe Stock Exchange and then list on a new USD denominated stock exchange in Zimbabwe.
The RBZ decision
We expressed reservations on how the RBZ unilaterally appointed Zimswitch to be the national switch that every financial services operator must connect to. That reservation was on a point of principle about the picking of a private company to perform the role of universal infrastructure within the market that private company competes in. Oh, there were a number of objections (some very understandable) about those reservations but we stick to that position.
The expressed reservations were expressed under the assumption that the RBZ made this decision to facilitate financial inclusion through interoperability. However, it seems the motivation is not at all noble. The motivation is to curb the parallel market which will not be achieved by this move without addressing the underlying cause of the parallel market.
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Over the past month, Zimbabwe Stock Exchange and mobile money platforms have come under scrutiny from the government. This scrutiny came to a head when the Permanent Secretary of the Ministry of Information announced a ban and temporary closure of both ZSE and mobile money in the country.
Veritas has come out and explained why such a ban (at least in the manner the Ministry of Information went about it) would actually be illegal.
Closure of Zimbabwe Stock Exchange and Mobile Money Platforms
On the 26th June the Permanent Secretary in the Ministry of Information announced that all mobile money transactions and trading on the Zimbabwe Stock Exchange (ZSE) had been suspended with immediate effect. The reason for the suspension, to quote his picturesque language, was:
“to deal with malpractices, criminality and economic sabotage perpetuated by the wolves in sheep skins amongst our population.”
These suspensions, if implemented, would have brought almost all business to a halt throughout the country. Fortunately they were not fully implemented. The next day the Governor of the Reserve Bank issued a statement saying that some mobile money transactions would be allowed to continue, namely payments of up to ZW $5 000 a day for goods and services and for utilities such as water, electricity and airtime. However, the suspension of all trading on the ZSE remained in force.
Neither the Secretary for Information nor the Governor of the Reserve Bank indicated precisely who had imposed the suspensions nor the law under which they had been imposed. One newspaper reported that the Government had gazetted a statutory instrument to back up the suspensions; it went so far as to say:
“According to the new gazette ‒ whose exact publication date has not been confirmed ‒ any person who contravenes the regulations shall be guilty of an offence and liable to a fine or imprisonment for a period not exceeding six months, or to both.”
To date, however, no such statutory instrument has been promulgated. The only new development is that the Reserve Bank issued a directive on the 9th July ordering all mobile money payment systems to link their services to ZimSwitch, the recognised national payment system, by the 15th August.
Are the suspensions lawful? In this Bill Watch we shall look first at the suspension of trading on the ZSE and then at the suspension of mobile money payments.
Suspension of Trading on the ZSE
The ZSE is registered as a securities exchange and supervised by the Securities and Exchange Commission of Zimbabwe in terms of the Securities and Exchange Act. The Commission does have power to direct the ZSE to suspend its activities in terms of section 105(1)(f) of the Act, but only after a full investigation by an inspector in terms of section 103 and after the ZSE’s board has been invited to comment on the inspector’s report in terms of section 104.
Manifestly that procedure was not followed in this case ‒ the suspension came like a bolt from the blue, without any preceding investigation, and the Securities and Exchange Commission did not order or instigate it.
The rules of the ZSE allow the ZSE board to suspend the listing of shares and to halt dealings in shares, but this power cannot be used to shut down the entire exchange. In any event, no one has suggested that the board initiated the suspension announced by the Secretary for Information.
There is no other law that allows the Government or any other entity to suspend all dealings on the ZSE.
Suspension of Mobile Money Payments
Mobile money payment systems ‒ i.e. systems which enable money transfers and payments to be made electronically by smartphone ‒ are governed primarily by the Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations, 2020 (SI 80 of 2020) [link], which were published on the 27th March this year.
Under section 3 of the regulations, “mobile money providers” [the term is not defined but presumably covers mobile bankers] must:
· be licensed under the Postal and Telecommunication Act, and
· obtain recognition of their payment systems under the National Payment Systems Act.
Presumably all the mobile bankers have complied with these requirements.
The regulations go on to lay down conditions under which mobile banking services can be provided: for example, mobile bankers must be connected to a national payment switch, must ensure inter-operability with other similar services, must keep proper bank accounts, must provide the Reserve Bank with periodic returns, and so on. If a mobile banker does not comply with any of these conditions, the Reserve Bank can impose a “civil penalty order” on the defaulting banker and, in addition, withdraw the banker’s recognition under the National Payment Systems Act [link]. In both cases the defaulting banker must be given an opportunity to dispute the action to be taken by the Reserve Bank:
· In the case of a civil penalty order, the Reserve Bank must give the banker at least 48 hours’ notice before serving the order, and the banker does not have to pay the civil penalty until after the order has been subjected to review or appeal by the High Court.
· In the case of withdrawal of recognition under the National Payment Systems Act, the Reserve Bank must notify the defaulting banker of its intention to withdraw recognition and must give the banker “a reasonable opportunity to make representations in the matter” [section 6 of the Act].
These provisions make the obvious point that before the Reserve Bank can take action against a defaulting banker it has to observe due process, i.e. it must notify the banker of the action it intends to take and give the banker a reasonable opportunity to explain itself.
In any event, there is no provision in the legislation for the Reserve Bank to shut down all mobile bankers, or even to restrict their activities without notice.
Conclusion
The Government’s suspension of all trading on the ZSE, and the suspension of mobile banking transactions, was not done in terms of any law and was carried out with no regard whatever to due process and fairness. The Government itself seems to have recognised this, albeit impliedly, because no officer or institution has claimed responsibility for the suspensions and no one has suggested a law under which they were imposed.
It cannot be emphasised too strongly that the Government has no inherent powers to act outside the law: everyone, including government officers and institutions, are subject to the law and must act in accordance with the law. This is inherent in the rule of law and is laid down in section 2(2) of the Constitution:
“The obligations imposed by this Constitution are binding on every person, natural or juristic, including the State and all executive, legislative and judicial institutions and agencies of government at every level, and must be fulfilled by them.”
And section 3(1) goes on to say:
“Zimbabwe is founded on respect for the following values and principles –
(a) supremacy of the Constitution;
(b) the rule of law;”
See also sections 90, 106(1) and 194 of the Constitution.
By disregarding the law so blatantly the Government has shown the hollowness of any claim that Zimbabwe is a constitutional state which respects the rule of law.
The Stock Exchange and mobile banking are two basic pillars of business in Zimbabwe. The mantra that “Zimbabwe is open for business” has no meaning if the Government fails to observe the laws by which Zimbabwe’s business is regulated.
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On Friday, the Magistrate’s court issued a search and seizure warrant giving the ZRP permission to raid Econet Wireless offices.
The Criminal Investigation Department sought the warrant on the basis that they suspect Econet Wireless to be “involved in money laundering”. In fact, the allegations are that Econet Wireless and subsidiaries created and issued “non-attributable and non-auditable individual subscribers merchants billers and agent which they credited with huge sums of money and distributed to the runners through their trust accounts. The runners would, in turn, buy foreign currency from the black before being externalized.”
Essentially Econet, Cassava and EcoCash are being accused of creating fake digital money and then using said money to buy foreign currency. The warrant was issued and a number of influential Zimbabweans have cried out against what they describe as a breach of privacy.
Fadzayi Mahere – MDCA spokesperson- was amongst those to speak out calling the warrant an “unconstitutional breach to the right of privacy”;
In a sweeping, unconstitutional breach of the right to privacy, a search warrant has been granted against @econetzimbabwe permitting @PoliceZimbabwe to obtain every single e-money transaction pertaining to every customer for the period 2 Jan 2020 to 30 Jun 2020. This isn’t right.
“Full subscriber details” of each user means they have your name, cellphone number, address and all EcoCash records for the relevant period. This is a far-reaching breach of privacy. Imagine what @PoliceZimbabwe can do in this authoritarian environment with such extensive data.
Mahere’s opinion is similar to my colleague who wrote the following on Friday night;
The fact that a court can issue a warrant against Econet (EcoCash really which is actually an entity on its own) which instructs police to get personal data concerning you and me is worrying. Zimbabwe really is a Banana Republic.
The court documentation filed by Econet as part of their Urgent Chamber Application to temporarily suspend the Magistrate Court’s decision to issue a Search and Seizure warranty to the ZRP makes for interesting reading.
Econet Wireless’ Chief Executive Officer, Douglas Mboweni has a written statement that is part of the Urgent Chamber application and in that statement the CEO argues that the state is using its powers to interfere with the rights of subscribers;
There can be no doubt that individuals and the society suffer at the hands of criminals. But there can also be no doubt that in the absence of a system of limits which limits state power by protecting substantive rights like the rights to privacy and the rights to dignity, individuals and society will suffer at the hands of the state and its officials.
The issuance of warrants of search and seizure is one of the tools that has been used by the state and its officials to unlawfully interfere with the rights to privacy and rights to dignity.
The Econet CEO also described the facts relied upon by the 2nd respondent (Mkhululi Nyoni – Head of CID Asset Forfeiture Unit) as “ridiculous” and not enough to justify the Magistrate Court’s decision to issue a search warrant. Mboweni says this is the case because;
Mboweni says contrary to Mkhululi Nyoni’s assertions Econet doesn’t have subsidiaries;
Mboweni notes that Econet “doesn’t have a category of customers/subscribers known as merchants; billers and agents”. Mboweni says Nyoni noted these as Econet customers when in fact they are relevant to EcoCash operations. Mboweni says this shows that Nyoni copied allegations laid against Econet by government officials a few weeks ago;
Econet’s CEO argues that all of their subscribers are “verifiable and auditable” and the company shares this information with the regulator POTRAZ;
Lastly, Mboweni also said the Econet network doesn’t have the capacity to credit any money to its subscribers. He argues Econet can only credit airtime to subscribers and that this airtime can’t be converted into any sum of money.
The above points are made on the basis that Nyoni gave the following statement when requesting the Search and Seizure Warrant;
I have reasonable grounds to suspect that Econet Wireless (Pvt) Ltd is involved in Money laundering activities in violation of section 8(1) (a) (b) ARW section 8(6) of the Money Laundering and Proceeds of Crime Act (Chapter 9:24). 3. On 9 July 2020, information was received to the effect that during the period extending from 011anuary 2020 to 30 June 2020, ECONET WIRELESS (Pvt) Ltd and as subsidiaries have been fraudulently creating and issuing non-attributable and non-auditable individual subscribers merchants billers and agent which they credited with huge sums of money and distributed to thee runners through their trust accounts. The runners would in turn buy foreign currency from the black before being externalized.
Mboweni goes as far as saying that Nyoni “did not apply his mind in coming to the suspicion that Econet is involved in the alleged crime.”
Lastly, the CEO also argues that the search and seizure warrant isn’t speficic enough in the following regards;
It doesn’t specify the premises to be searched and yet Econet has “a number of premises from where it operates throughout the country.”;
The search warranty doesn’t identify which police officer should execute it’;
Mboweni argues that if the magistrate had applied his mind he wouldn’t have authorised the warrant “which does not point to the commission of the alleged crime in any way”.
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It looks as though many people had not noticed the increase in tariffs. That being said they didn’t really publish this, it may have been something they published in the newspapers, and we hadn’t yet noticed.
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On the 9th of July, the Reserve Bank of Zimbabwe issued a directive that made ZimSwitch the national payments switch. This meant that EcoCash was going to be relegated to being just another wallet. ZimSwitch as the national switch for Mobile Money means that one can essentially send money from EcoCash to OneMoney or Telecash or any bank account even one that is not linked to one’s EcoCash wallet (and vice versa). Well, that deadline for everyone to connect to the national switch was the 15th of August 2020.
The 15th of August was an ambitious date to set for integration on this scale. These are incredibly complex parties to bring under one umbrella. It wasn’t feasible for several platforms on different systems to be able to intergrate that quickly. We spoke to some source at EcoCash and they said that they hadn’t met the deadline and to our understanding, the other mobile money operators haven’t as well.
On that note
There was an article by Cash Talk where they attempted to see if the National Switch was in effect. The transaction they demonstrated (Sending money from EcoCash to NetOne) is something that has always been there. We reported on this in May, sending money from EcoCash to NetOne at present is the same as sending money from an EcoCash wallet to an unregistered number even an unregistered Econet number. This is not wallet to wallet interoperability.
The only way to get the money, in this case (when sent to a NetOne number from EcoCash), is to go to an Agent to cash out. The problem is that there are no agents operational to facilitate a cash-out.
The money that is sent like this will be stuck in limbo and may reverse if left unclaimed. It’s a surprise that EcoCash and other mobile money providers still have this transaction in place. Without anyone to facilitate a cash-out then there really is no point to this.
It is not clear when EcoCash, will be intergrated with ZimSwitch nor when all players will have real wallet to wallet interoperability. OneMoney and Telecash are already on Zimswitch somewhat but not to the scale demanded by the central bank now.
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Earlier today, the RBZ published the Monetary Policy Statement and there are a number of pretty shocking declarations. One of which is that agents lines are officially a thing of the past.
The same document also outlines that mobile money wallets will now be limited to one per individual.
RIP agents (2011-2020)
Agents have been a huge part of Zimbos life for the last decade. The RBZ suggest that they are out of our lives for good;
The central bank claims agents with funds in suspended/frozen accounts will be allowed to move the money to their bank accounts. But even that comes with a big asterisk since the funds will be moved on one condition. The Financial Intelligence Unit will first “determine the legitimacy of the source of funds.”
How many people will be affected?
In 2019, there were 59 219 agents. It is widely believed around 50 000 of those were EcoCash agents so that will be the most widely affected service provider. To be fair when you consider that agents had multiple agent lines the actual number of agents might be lower than 50 000.
Impact
It will be interesting to see the impact of this ban. In rural areas, agents had become the only source of cash since there are no banks and the RBZs overnight bans mean accessing cash in these areas will become harder.
In both rural and urban areas, agents were charging a premium for cashing-out (withdrawals). This will probably get worse since the agents (or people still assuming this role) now use normal lines that have a daily limits of ZW$5000.
On the flip side, this could mean people transition to digital money as cash becomes harder to obtain.
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