Current NewsHot Stuff

EcoCash slowly fading into oblivion as Govt directives take a toll on its operations

0

Zimbabwe’s biggest mobile money platform Ecocash is gradually fading into oblivion following government directives which evidently have been a direct attack on its operations.

By Leona Mandengu

This comes after close to a decade of existence.

The mobile money service was introduced in September 2011.

More than five years ago one could find EcoCash on almost every corner of the streets in the CBD.

EcoCash flourished due to the increase of mobile penetration rate which stood at more than 95% in 2017, according to Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) report.

The POTRAZ report show that as of November 2017 the mobile service had about 6.7 million users controlling 99.8% of the mobile money market in the country at that particular time.

The high mobile penetration rate and economic crisis stimulated the growth in mobile money usage giving birth to many agents.

By may 2020 Ecocash had registered over 54k agents.

Agents were now making a brisk business by charging premiums of 40 to 60% for Cash Out transactions taking advantage of the cash shortages in the country.

An investigation by TechnoMag proved that Ecocash is gradually losing market relevance, Ecocash transactions against the daily limit is proving to be difficult.

Tracing back to 2019 it probably never dawned on the money service users and agent owners who were making a killing by charging premiums as much as 60% .

Speaking to TechnoMag a young man by OK Supermarket said , “ These days Ecocash is now like a visitor , its not that easy to get as before, I am even struggling to get a transfer to purchase airtime.”

“ Even when you have your USD and want Ecocash its now like you are broke cause you will not get it easily , I miss agent lines, I could have easily and instantly converted my money into plastic at a better rate and continue with my business.”

Another lady who spoke to TechnoMag said, “ We want government to bring back agent lines , making high volumes of transactions is now difficult, I cant even make fees payment for my three kids, I had become so used to Ecocash that the current changes are complicating our daily lives.”

Efforts to get comment from Ecocash authorities were fruitless as they were not responding to questions sent to them by this reporter .

While the ban of agent lines has taken a toll on money changers , transactions have also decreased by day.

The Postal Telecommunications Regulatory Authority of Zimbabwe latest Sector Performance Report states that mobile money subscriptions declined by 2.8 % in the second quarter of 2020 a decline being attributed by the deactivation of agent lines accused of illicit financial dealings.

The use of agent lines had given birth to money changers , which the Reserve Bank of Zimbabwe alleges were fuelling the black market causing a distortion of the foreign currency market.

The central bank started issuing directives to cripple the mobile money player by freezing agent lines , putting a cap on transactions however ,they would end up in court and it became more like mobile money politics.

Government through the RBZ finally cracked down on the mobile money player that used to be a source of cash , instrument for money dealings and had been fuelling the parallel market , as it alleges.

RBZ recently placed directives that have crippling the mobile player , shutting lucrative doors of forex operations and high transactions.

On 21 August RBZ banned agent lines with immediate effect arguing that they no longer server any legitimate purpose.

“Agent wallets are no longer serving any legitimate purpose and were now being used for illegal financial activities Agents’ mobile money wallets are therefore abolished, with immediate effect,” read the monetary policy statement of 2020.

This was probably the last nail to the coffin , which most reports quoted as RIP Ecocash agents for nearly ten decades.

Money changers who were feeding on the agent lines started to feel the hit , while business took a different shift.

In July 2020 RBZ mandated Zimswitch as the national payment platform encompassing all mobile platforms.

“In accordance with the provisions of the National Payment Systems Act [Chapter 24:23] and the Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations, Statutory Instrument 80 of 2020 (the Regulations), the Reserve Bank of Zimbabwe (the Bank) wishes to advise the public that it has designated Zimswitch as a national payment switch with immediate effect,” said RBZ governor John Mangudya in a statement.

Meanwhile Ecocash complied with the directive beginning of October the mobile money wallet joined Zimswicth meaning subscribers can now send money from Ecocash to OneMoney and other accounts directly.

The screws on Ecocash were further tightened by the transaction limit of ZWL$5,000 per transaction.

RBZ argued high volumes of transactions that were being done with most accounts being abused and used for illegal transactions distorting the foreign market and causing rates to spike.

Sometime last month President Emmerson Mnangagwa during his speech in Gweru speaking to the Zimbabwe African National Union Patriotic Front provincial coordinating committee said that government cracked down on Ecocash after it had discovered that it had created $8.4 billion phantom money

Mnangagwa said a committee that was set up to investigate what was happening discovered that some people with no source of income at all were trading as much as $86 million a day from their Ecocash accounts.

“We studied this thing. We were able to go the server. Server yacho. Ndokwatandowana zvose. Huori hwese. Haah, ndokutora zitsvimbo, ndokurova,” he said.

The directives and restrictions has hit hard on the mobile money service , while facing agent line ban, transaction limit , integration with Zimswitch business can definitely not be like 3 years ago

However, the sinking of such a big mobile money service amongst other mobile money platforms like TeleCash , One money and My Cash that faced the same fate is likely to a huge blow to financial inclusion in the country.

While the country is battling with a collapsing economy characterized by cash shortages , crisis hit traditional financial systems , such restrictions on the mobile players is likely to hinder progression in mobile money.

Apple officially unveils iPhone 12 with 5G network

Previous article

South Africans to pay TV licences to consume Netflix Content

Next article

You may also like

Comments

Leave a Reply

More in Current News