Regulation of mobile transactions overdue

THE suspension of mobile-based money transactions and trading on the Zimbabwe Stock Exchange by Government to allow investigations into illegal dealings connected with the foreign currency black market were long overdue given the rampant indiscipline on the market and attendant dire consequences for the economy.

While many might have construed Government’s decision as more of a knee-jerk reaction to galloping inflation fuelled by a haemorrhaging of the Zimbabwe dollar against major currencies such as the United States dollar, the stark reality is that speculators were having a field day by pumping fictitious money from bloated mobile money accounts which they used to mop up US dollars on the streets.

One of the mobile money platforms — EcoCash — which prides itself as being the leading company in that field in the country (it handles 94 percent of all mobile transactions in Zimbabwe) — appears to have slept on the job resulting in nefarious characters using its platforms to oil the engines of the foreign currency black market.

Given its sheer size and the huge responsibility that comes with it, we contend that EcoCash needs to put in place a robust system to detect suspicious activities on its platforms.

As things stand, black marketers and other speculators are having a free reign where they, on a daily basis, offload millions of Zimbabwe dollars onto the streets which are then used to buy US$ and other foreign currencies.

While some of the money used to trade on the streets is legitimately earned, it is apparent that some of the balances on mobile money platforms are manufactured.

We hold no brief for the proprietors of EcoCash nor are we seeking to cast aspersions on them but the bottom line is that their platform is being used to fuel the parallel market which is wreaking havoc on the economy.

Ordinary Zimbabweans are suffering, their incomes are being eroded while prices in supermarkets and shops are galloping on a daily and in some cases, hourly basis due to inflation.

We are cognisant of the important role the company plays in the economy by providing a flexible and convenient mobile money service but it’s apparent that the system is open to abuse.

It is astonishing that a mouth-watering sum of $8 billion is being held in 501 000 merchant and agent lines while large sums also lie in suspense accounts at EcoCash. It is equally staggering that these accounts were not being monitored by the RBZ Financial Intelligence Unit opening them to abuse not only by speculators but criminals, terrorists and money launderers.

The Know Your Customer principle, the cornerstone of the banking system, was not being used by EcoCash.

So the decision by Government to intervene and bring normalcy to the market was not only apt but critical given the national security implications of letting a “Wild Wild West” scenario unfold before its eyes.

It would be a gross abdication of duty on the part of Government to let criminals run amok on the streets of Harare, Bulawayo and other cities mopping up foreign currency using ill-gotten gains while the generality of Zimbabweans suffer the consequences.

We therefore support its suspension of the merchant and agent lines and trading on the Stock Exchange as this will allow for unfettered investigations and time to put in place reforms that restore mobile money platforms to their original purpose.

We are also glad that there won’t be any collateral damage to the innocent transacting public who use mobile money platforms as they are continuing to use their EcoCash, TeleCash and One Money for day-to-day transactions.

The net effect of bringing normalcy to the market is to converge all exchange rates to the single market-based exchange rate set by the weekly auctions run by the RBZ.

We know this will be possible once the black market, which is being funded and fuelled through the use of mobile money platforms, is obliterated. Once this happens, prices will stabilise.

We hope the Government is crafting measures to monitor and regulate mobile money transactions just as it is doing with bank accounts which fall under the purview of the RBZ.

This will allow it to curb abuse and audit accounts which are being used by criminal syndicates.

On the ZSE, Government should also monitor counters responsible for generating fake exchange rates and engaging in illegal externalisation of foreign currency through transfer pricing. All these measures should be implemented without fear or favour for the benefit of the economy and the people of Zimbabwe.