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.