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Govt Blocks, Ecocash Old Mutual Implied Rates and other mobile money platforms

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Just like Gideon Gono did in November 21 of 2008, today the Zimbabwe government has suspended the Old Mutual Implied Rate (OMIR), Stock exchange trading and all mobile money transaction in a desperate bid to curb the ruanway inflation pending investigations of malpractices and economic sabotage.

In a four paged press statement, the government through Information Ministry permanent Secretary Nick Mangwana accused Ecocash, One Money and Telecash for fuelling informal foreign currency business which has lead to local currency volatility.

“Government has, with immediate effect, undertaken a series of prudent and coordinated interventions to deal with malpractices, criminality and economic sabotage perpetuated by the “wolves in sheep skins amongst our population,” read part of the statement.

“These measures include the suspension of all monetary transactions on phone-based mobile money platforms in order to facilitate intrusive investigations, leading to the arrest and prosecution of offenders.”

Concurrently, the measures will also include the suspension of all trading on the Zimbabwe Stock Exchange.

In addition Government said, 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 this week.

Operational modalities and details of the envisaged measures are going to be announced by the relevant monetary, regulatory and law enforcement authorities in the next few days.

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.

However, some of the economic malpractices being levelled against mobile money operators include;

-a) Illegal externalization of foreign currency through transfer mispricing;
b) 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 distributed across just over 501 000 agent/merchant lines as at 10 June 2020, which is not under the scrutiny of the Financial Intelligence Unit;
c) Fraudulent creating and-issuing non-attributable and non-auditable agent cellphone lines/accounts;
d) Hiding irreconcilable accounts in suspense accounts which hold huge credit balances for unjustifiably long periods;
e) Ecocash, in particular, is acting as the center pivot of the galloping black market foreign exchange rate and therefore, fuelling the incessant price hikes of goods and services that are bedeviling the economy and causing untold hardship to the people of Zimbabwe. In this regard, it has been conspiring with big merchants to act as their conduit through which they transfer hundreds of millions of dollars per day.

In a similar move last year, Government, through the central bank banned all Cash-In and Cash-Out activities, but made climbed down following massive public outcry.

Mobile money transactions constitute over 80% of day to day business trading in Zimbabwe.

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