Suspension of mobile money services may or may not work
The move by the Zimbabwean government to suspend mobile money operations on Friday has shocked the country’s transacting publics who were now accustomed to using mobile money as a vehicle of daily transactions.
Rightly so, a lot of aspersions were cast regarding this move by a government that seems to be cornered on the economic front.
There is very little or no goodwill left for our government at this moment and it is an agreed fact that Emmerson Mnangagwa’s regime has failed on many, if not all fronts.
The statement by government spokesperson Nick Mangwana is more of a political one, and in the absence of enabling legislation, the Ministry of Information has no legal power to close off mobile money services. Mobile money services are regulated by the Reserve Bank of Zimbabwe (RBZ) at law.
So, until there is a statutory instrument from the Minister of Finance, your account balances are safe and you can still transact.
However, the move, if legally ratified by the central bank, is a necessary evil. The mobile money service providers are by and large unregulated and have limited supervisory scope by their nature.
They have been warned several times by RBZ’s Banks Supervisory unit to strengthen controls and utilise the know your clients (KYC) mechanism for their millions of clients. Ecocash, in particular, was more vocal in defiance of the regulatory directive, and the arrogance spread over to other networks as well.
This is now karma catching up with them.
But why is it a necessary evil? Mobile money, if unregulated or uncontrolled, leads to the creation of money, and in our case that money has not been linked to production but mainly illicit foreign currency trading activities. Broader money supply challenges are an everyday platter for the central bank! No?
We should all be in agreement what has led to a spike in foreign currency rate, and in effect runaway inflation. The reported ZWL8 billion circulating in mobile money wallets and thus circumventing the official banking system is massive for a non-performing economy such as ours.
The suspension should stabilise the rate, and it should be good news for the generality of Zimbabweans who are small fish in this whole saga.
However, there will be a lot of inconvenience to the general transacting public as almost 80% of Zimbabweans are unbanked. It will become difficult to move money locally and it would now mean our Gogos and Sekuru’s in the rural areas become financially and transactionally disenfranchised.
The option for them would be to get bank accounts, and use plastic money but the challenge will be whether banks will be willing to spread their branch networks notwithstanding the operational costs. In fact, most major banks have been closing or downsizing their branch network coverage. The inconvenience will be huge, especially considering the lockdown restrictions that limit travel to only essential purposes.
Secondly, there is going to be a spike in demand for physical money (notes and coins) as the stubborn parallel market will be left with only that option because banks are by and large regulated and transfer of money without proper documentation would be cumbersome.
This means the bank notes will be in short supply and government, in the middle term, will need to print to quench the insatiable thirst of the banking and even the non-banking public.
The USD to cash rate will increase in that regard but I don’t foresee it creating a big gap with the official auction system rate.
Thirdly, the suspension is going to be short lived. We anticipate that there will not be a total ban but stringent conditions will be set by monetary authorities before full return of mobile money players. It’s going to be especially tight for hundreds of Ecocash agents because their activities will be strictly monitored and operational modalities will be reviewed if they are to remain in business.
In conclusion, Chatibwege is sitting on the fence regarding this move. It may work or it may backfire.
But the permanent solution is not really on these numerous statutory instruments which have become the order of the day.
The solution lies with REFORMS!
We need political reforms and unity on the political front, as tension in the political environment is having ripple effects on our impoverished economy. There must be meaningful dialogue between the main political protagonists on the minimum, or unity for the better.
It is apparent that Political Actors Dialogue (Polad) is not working, therefore, Zanu PF should be engaging with MDC Alliance for the greater good instead of seeking to decimate it through Khupe or Mwonzora.
We need political parties to work together in parliament and at executive level to ensure that we have the following key reforms:
- Legal Reforms – several laws are still to be aligned to our “new” constitution. We also need to sanctify the constitution and abide to its tenets. Already, the negotiated 2013 constitution is being tampered with as several bills are being rushed through parliament with limited people involvement. Of note are those bills that seek to give unlimited power to the executive arm of government. The judiciary, both the courts and the Judicial Service Commission, must be reformed. The judiciary’s image is bartered.
- Economic Reforms – reforms on the economic front to ensure normalcy returns in all sectors. We need productivity and solutions to current quagmire situation of limited capacity utilisation. Industry retooling and import substitution are key to the turnaround of our economy.
- Media Reforms – the freedom of expression standard must be lifted to international best practice, and multiplicity in media players must be insured and their independence guaranteed. It is backward to be targeting and harassing journalists in this era.
- Electoral Reforms – although we are two years since the last election and only three years to the next one, this has been our biggest Achilles heal and reforms are necessary to ensure legitimacy (or lack thereof) issues are addressed in future elections. ZEC must be made independent and immune from interference especially from the incumbent government. The electoral playing field must be levelled and that includes separation of government from ruling party, taxpayers’ resources must not bankroll an incumbent party and all Zimbabweans must fight to have sanctions remove as their coercive force in deterring electoral choices cannot be ignored.
- Security Sector Reforms – this is a sensitive issue which I will not try expand on but it’s important that our security services bartered image not just stemming from the 2017 removal of Robert Mugabe or the 1 August 2018 “mishap” but from the 1980s human rights issues. The incumbent will be reluctant if not powerless to push these reforms for obvious reasons but the country must move forward from the current challenges.
- Institutional Reforms – strengthening our public institutions and freeing them from government interference or abuse. With strong institutions we can fight all the evils bedevilling our nation, including the cancer of CORRUPTION.
- Peace and reconciliation. This cannot be over-emphasised but it is necessary to heal the nation and foist unity among our people. We are still suffering from the effects of Gukurahundi in the 80s, infamous short/long sleeve as well as Murambatsvina of the 2000s, we still have wounds from the 2017 operation restore legacy as well as the repugnant 1 August 2018 shootings whose wounds have become septic instead of healing.
The reformation agenda is not limited to the above.
But this highlights that the financial sector reforms cannot work on their own with other reforms as explained above. It will be like trying to stop a running stomach with a cello tape.
Tensions are currently high, and politicians must de-escalate. Otherwise we will soon plunge into chaos and insecurity.
WE CAN’T BREATHE!!!
May God Bless Zimbabwe
#Chatibwege ~ an independent analyst whose views are non partisan. Never shoot the messenger, else you miss the message.