It has surfaced that the Reserve Bank of Zimbabwe’s Financial Intelligence Unit while awaiting the outcome of Ecocash’s urgent High Court Application against agent account freezes has directed Steward Bank to freeze Ecocash’s trust accounts. This move would effectively cripple Ecocash operations as they would not be able to process transactions. According to the directive the Apex bank has instructed Ecocash to reregister agents to ensure only Bona fide agents remain on the platform. They have cited rampant abuse of the platform with growing transaction volumes on the platform not backed by any business reasons. This is the RBZ’s response to the recent spiking of the exchange rate.
The mobile money transfer trust account is the mechanism through which a platform like Ecocash which is ordinarily outside of the banking platform interacts with banks and allows customers to perform bank to Ecocash transactions and vice versa. The RBZ has directed that Steward bank, in this case, reject third party deposits into Mobile Money Trust Accounts and limit deposits to a laughable ZWL$550000 per month. The bank does provide that as Ecocash re licences agents they will approve higher transaction limits for their trust accounts.
The Reserve Bank has really turned up the heat on Ecocash and to a lesser extent One Money over the lockdown period in an attempt to slow down the parallel market. As we have already witnessed the strategy has yielded precious little as the parallel market rate was sent racing this week alone. It is becoming more and more evident that Ecocash is but a conduit of the parallel market and not the cause. The nation is expecting a boost of at least ZWL$1000000000 through the introduction of the new $10 notes. With the $20 notes expected in June, it is reasonable that market participants expect the exchange rate to rise further. The Reserve Bank should be more concerned with solving the root cause and not hacking at symptoms and conduits.
The fight between the RBZ and Ecocash is a long-running one and this latest move by the RBZ is an attempt to preempt the High Court application made by the mobile money agent. The decision from this case was highly anticipated but may mean little as the Reserve bank directive effectively freezes agents or slows them down.