Pursuant to the warning they sent out to their agents Ecocash has shut down over 1000 agent lines in the past 3 months for “selling” cash. This was said by Ecocash general manager Munyaradzi Nhamo speaking to 263Chat. According to him they have been tracking the activities of the agents for some time and have gradually taken action against those found to be in the practice. When Ecocash published a warning to agents seen on social media it was greeted with extreme scepticism by many Zimbabweans.
The cash crisis is not an Ecocash issue, it is a national issue that has popped up as a result of bank balances that far outweigh cash in circulation. The cash crisis is the reason we have the bond note today. Ecocash has done well to surprise people and live up to their word, that is surely welcome as many had dismissed their warning as empty.
However, Ecocash’s clampdown on agents has not deterred the selling of cash as it is still being sold for rates as high as 40% extra. Clearly, the solution to the problem requires more than agents being shut down for joining in the practice. Many reports have been made on how the cash selling system works and how it is linked to the currency black market. At every single point of cash exchange, the premium is being applied. Parallel market traders are also known to be participating in selling cash as they seem to have an endless supply of it. They are much harder to trace.
The consensus has thus far been that agents were being opportunistic or rent-seeking in a situation they did not create. Ecocash in turn, while aware of the situation largely turned a blind eye. The people who can make a change to the situation would likely be reluctant to do so. Zimbabwe is still very much a cash-based economy, even on the parallel market for currency two different rates are offered for cash and electronic funds. Cash attracting an exchange rate of ZWL$8.30 to the US dollar while electronic funds attract ZWL$11.50 a difference of 38.55%. The government of Zimbabwe has made a pretty penny, even to the point of boasting surpluses, thanks to a money transfer tax that was placed on all funds transferred electronically with a few exceptions. For this reason, they are unlikely to want to see an end to the cash situation.
I recall one of the reactions to the earlier warning by Ecocash being “If I report and my agent is shut down, where will I get cash from”? In reality, the action of closing down 1000 agents out of a 50000 agent network will not likely change the situation. The factors at play are outside the control of agents or Ecocadh itself. If this exercise continues and it becomes unbearable for agents to continue, other avenues will be found. However, credit must be given to Ecocash for taking action, however futile, on an issue that customers have complained about for quite some time now.