Last week, Econet launched EcoCash Diaspora, basically a means for Zimbabweans outside the country – and there are millions upon millions out there – to remit money back home to relatives. But EcoCash and WorldRemit’s arrangement has two major weakness. 1) it’s not available where most of these millions of people are are. The big relevant markets it’s in are just Australia and the UK. No South Africa. No Malawi. No Zambia. No Botswana. No Namibia. Well, essentially, no Africa. 2) To send money to Zimbabwe, you need a bank account so that you can use your credit or debit card on the WorldRemit website. This effectively excludes millions of illegal immigrants and generally low income informal workers that don’t have bank accounts.
Econet are aware of these weaknesses and said last week that they are busy working on solutions. But Zimbabweans in these markets aren’t waiting. A Zimbabwean who was in Botswana over the weekend told us there’s a vibrant informal market for remittances to Zimbabwe via EcoCash.
How the transaction works is that the sender approaches a parallel market guy in Botswana. hands over the money and an EcoCash number its supposed to be sent to. These informal market guys then send a message to someone in Zimbabwe to make the transfer to the number instantly. it’s basically the same way Western Union, WorldRemit etc.. work except this is not a registered financial services business. The transfer rates are anything between 5% and 10% we’re told. Very competitive. And like any black market, if you don’t like this guy’s rate, there’s another guy just a few paces further offering the same service.
“Lots of people can do it or you,” said our guy, “the 5% guys are harder to find but those offering the 10% fee are everywhere.”
This service is likely not new. We suspect it’s happening for a while now along with the other methods like the bus drivers and truckers physically crossing the borders with the money. We have no idea if it’s happening in South Africa and the other markets as well, but it likely is. Please do fill us all in the comments if you know more.
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