EcoCash heads to court over agent line freeze
The Reserve Bank of Zimbabwe (RBZ) has been dragged to court for directing that mobile money operators freeze agent lines accused of fuelling illegal foreign currency trade in the country, with EcoCash, the most popular platform, arguing that the directive is now inconveniencing its 11 million subscribers.
Agent lines are used for key cash-in, cash-out, prepaid electricity sales and airtime sale transactions used to boost financial inclusivity in Zimbabwe.
RBZ believes some of these lines are being abused by parallel market foreign currency dealers to spike rates associated with the Zim dollar.
On 4 May 2020 the financial regulator directed EcoCash and One Money mobile money service providers to freeze agent lines transacting over ZWL100 000 a month - equivalent to approximately US$2 200, based on the street rate of 1:45.
On the official market, the amount is equivalent to US$4000 using the interbank rate of 1:25.
Under the directive affected agent lines must re-apply and re-register with EcoCash, and the operator is then required to re-register new agent lines at the approval of the National Payments System of the RBZ.
EcoCash and its holding company Cassava Smartech issued a statement last night which reads: “EcoCash wished to advise that we received a directive from the RBZ and the Financial Intelligence Unit to the effect that all agent (lines) with transaction limits of over ZWL100 000 per month should have their accounts frozen with immediate effect.”
EcoCash added that it was not consulted prior to the directive being issued and the development means that “agents will not have access to their float funds as well as liquidations” to enable them to function effectively.
While the operator has so far complied with the directive, it has since applied for an urgent interdict to lift the directive.
In an affidavit dated 6 May 2020 attached to the application, Eddie Chibi, CEO of Cassava Smartech, said that EcoCash now has 53 924 agents which assist mobile money users in the country to access the “most important” cash-in and cash-out functionality on the platform.
“The number of agents currently registered with applicant is way higher than the number of banking branches of all banks in Zimbabwe combined. Many banks closed their branches and EcoCash has filled the void created by these closures,” Chibi stated.
Market Watch Zimbabwe said this week that the directive had resulted in “a mild firming” of the local dollar.
“Financial Intelligence Unit (of the central bank) sussed out a list of suspected mobile money wallets from both EcoCash and OneMoney. The list of over a 100 wallets was then sent out to banks with the directive that they freeze the wallets and their linked bank accounts immediately,” the organisation reported.