Munyaradzi wekwa Chivi
Ecocash recently lost a court case against the Reserve bank of Zimbabwe where it was seeking an interdict to stop the central bank from suspending the agent lines of its customers. The challenge was dismissed on the grounds that the mobile money operator could not interdict a lawful act, and that Ecocash had no standing to litigate on behalf of its agents.
The ruling was met with mixed reactions. The majority of people celebrated the ruling because they were made to believe that Ecocash is responsible for fuelling the parallel forex exchange market which has worsened the country’s economy. Many believe in this narrative because they see most forex transactions being done via the mobile platform. But those who celebrated later saw that forex transactions continued to take place in the black-market after thousands of agent lines were closed.
The exchange rates in the parallel market slightly went down from Usd$1:ZW$75, to Usd$1:ZW$60, a figure which Is higher than the official exchange rates at the Interbank which are standing at Usd$1:ZW$25.
The closure of agent lines did not stop forex transactions on the black market as they continued to take place through banking platforms like ZIPIT and Online Banking. This exonerated Ecocash from the labels and accusations of it being a “Ponzi Scheme” responsible for causing a spike in the parallel exchange rate.
Although it is an undeniable fact that some agent line customers were abusing the platform for illegal forex trading, the majority of those transitions, especially those involving huge sums of money where being done through banks.
Our research reveals that about 16% of transactions were done through the mobile money platform and the remaining percentage was carried out through banks. The banks continued to be used for forex trading until the central bank introduced limits to the ZIPIT platform. The move failed again to quench the parallel market as black market dealers continued to trade using the mentioned rates.
The country expected to see a rapid decline of the parallel market after the introduction of these measures. But nothing has changed, it is still business as usual in the black market. This brings us to a conclusion that Ecocash had nothing to do with the spiking rates, it just happened to be a platform that traders use to send and receive money, and for small businesses to transact through agent lines. I am sure that the central bank knows the people behind the currency manipulations, but they choose to go after a business with operations that are helping the public to transact conveniently.
The closure and re-registering of agent lines which was ordered by the RBZ will bring a lot of inconveniences to businesses and customers using those lines. No changes will be witnesses in terms of stopping the black market. The country’s financial sector is in a mess. It has been marred with policy inconsistences tracing back from the dawn of the new dispensation. All changes and flip flops we have seen happening in the country’s monetary policy reveal that we have a clueless governor at the helm of the central bank.
The Governor is now using the Financial Intelligence Unit to harass businesses that have nothing to do with the currency problems we are facing to cover up his incompetence. This is why most people are calling for the FIU to act as a standalone entity to allow it to effectively carry out its duties. The country cannot function properly when the FIU is being used to suspend agent accounts without consulting with Ecocash and other service providers. These lines are tied to the businesses of clients so closing them without conducting consultations will not only affect the clients, but also brings the name of the company to disrepute.
It is also important to note that RBZ had no evidence that the agents they ordered to close where committing the crimes they mentioned. RBZ did not provide evidence that agent so and so are involved in illicit financial trade. Their only point was that the transactions being conducted by the lines were too high. But the figures were completely reasonable considering how much our local currency has lost value against the U.S dollar. The ZW$ 100 000 peg translates to US$ 1600 if exchanged using today’s rates (Us$1:ZW$70).
That is a reasonable figure for businesses to reach and surpass.
So the ruling was not fair on Ecocash and its clients. The judgement was made based on the misrepresentation of facts by RBZ on Ecocash mobile money services. Econet was accused of running a Ponzi scheme and manipulating the black market rate. Basically this is a composition of fallacies and nicely crafted falsehoods to manipulate public opinion.
The judgement was driven by political motivations that infected the judicial process in a manner which eroded impartiality and even-handedness. While misappropriation of the law may seem to offer short-term gains to political actors, in the long run it undermines the legitimacy of government.
This case makes it clear, by its glaring absence, that one core component of the rule of law is the separation of law and politics! In this case, the political expediency was taken to the core!