On Friday the 20th of August Reserve bank Governor Dr John Mangudya published the mid-term monetary policy review. Many would-be forgiven for forgetting that it was due. It was, however, an important policy announcement as it marks the first monetary policy statement since the formation of the monetary policy committee. In the past poor monetary policy was blamed on the lack of consultation so having a committee of advisors that meet regularly chipping should mean for better policy. Well the statement was full of the usual waxing lyrical about the moves they have made in the past but we will rather dwell on the new measures, their meaning, the intention behind and what to expect because of them.

Uniform export proceeds surrender

The preferential treatment of exporters by sector that allowed others to retain higher percentages of the foreign currency proceeds as foreign currency is over. All exporters will surrender 30% of their foreign currency proceeds at the bank rate while being allowed to keep the remaining 70% for 60 days up from 30 days. This move is not hard to understand, the bank wants to direct more money to the foreign currency auction system.

Mandatory Forex liquidation

Meanwhile, those trading in foreign currency domestically will be forced to liquidate 20% of their foreign currency proceeds upon depositing the money. Again we are looking to feed the supply side of the auction system. It’s important to note this applies to businesses and not free funds deposited in FCA Nostro accounts.

Bureau de Changes boosted but…

Bureau de Changes had their bid-offer spread (markup they can apply when buying currency) increased from 3.5% to 5% of the prevailing rate. Based on the auction-rate they can buy US$1 for ZWL$87.07 which is competitive but not quite attractive, The BDC will seel 80% of their US dollar balances every Monday to the RBZ, again a move meant to boost the foreign currency auction by increasing the US dollar supply.

Mobile Money

Mobile money will perhaps be the most impacted sector after the announcement. Individual mobile wallets have been limited to ZWL$5 000 per day, this limit was operational before the statement. Agent accounts were abolished and all those with funds stuck in them will have their funds liquidated to bank accounts if they satisfy the Financial Intelligence Unit. The Governor reasons that agents currently have no role to play in mobile money. This is probably an indication that the RBZ plans to do nothing about cash shortages. Mobile money operators were also directed to limit mobile money wallets to one per individual. Merchant mobile money accounts shall no longer be able to make payments but will remain open for inbound transacting for retailers and service providers.

The RBZ also moved to effectively ban bulk payments via mobile money meaning such transactions must be processed through banks. Let us set aside the debate as to whether mobile money is responsible for any of the accusation thrown it’s way. What the RBZ  has done here is push mobile money out of banking, whether that is right or wrong. Mobile money will be relegated to another transaction method and not a very good one if you have to make 3 payments at 1 payment per day to settle a simple internet bill. Here can only hope that the close relationship between the RBZ and banks will result in banks addressing the failures that pushed customers to mobile money in the first place.


The connection to Zimswitch as the national payments switch deadline which was the 15th of August has now been moved to the 30th of September. Mobile money interoperability will have to wait for this deadline and I’m going to hazard a guess and say a little bit after.

The statement spent a  lot of time focusing on the auction system and perhaps rightly so. The auction despite its gaping flaws has shown signs that it can work. I suppose anything can work when approached properly. Mobile money got a lot of attention but the moves made will at least in the short not be for the better. Attempting to move people back to banks without addressing the ways the banks failed them is a recipe for disaster. All eyes shift to the next foreign currency auction to see whether we are closer to stability or if it was just a case of the calm before the storm the Governor delivered.