After the announcement on Friday that the government of Zimbabwe would be closing mobile money and the Zimbabwe Stock Exchange, the majority reacted in disbelief. However, reality started to set in slowly. Messages sent out by both Ecocash and One Money advised the public everything was fine. The Reserve Bank of Zimbabwe responded on Saturday with tightened measures for mobile money companies but maintaining that purchase and peer to peer transactions were still operational. On Sunday, the Zimbabwe Stock Exchange Chief Executive Officer Justin Bgoni sent out a letter advising that the ZSE would be closed until further notice. Both these statements serve to confirm that the announcement was true despite the source.

Mobile Money

The Reserve Bank came down on mobile money agents. As the press statement read it is mobile money agents who have been barred from operations except to receive payments for goods and services and merchant accounts have been given a similar treatment. Transactions have been limited to ZWL$5000. The statement is unclear on whether this limit applies to the merchant or the individual. As per usual we should expect them to clarify. Zimbabweans were preparing for the horror of life without mobile money but as many had pointed out by the Monday rolled around we would have some sort of relaxation to the announcement.


Not so fortunate are investors on the ZSE who received the letter from Justin Bgoni informing that no trades will be carried out. This is an unexpected blow that highlights just how volatile the Zimbabwean environment is. The Zimbabwe Stock Exchange had recently been on an amazing bull run trending upward perpetually. So good was the movement that many counters were outperforming inflation with only a handful of counters performing below inflation. With very few places to hold money in the short term Zimbabweans looked to the ZSE as an inflation hedge. However, Nick Mangwana alleged that players were using the exchange in illicit foreign currency dealings. His gripe was with the Old Mutual shares which continued to give people a measure of a parallel market rate, the Old Mutual Implied Rate.

The pot calling the kettle black

When the RBZ released its money supply update I expressed concern at the change of measurement period from months to weeks. In the latest report money supply growth is confirmed to still be high and climbing. In a single week, June 12th to 19th, Reserve money and deposits grew by nearly ZWL$600 million and that was mostly in Bank balances. Reserve money stands at just under ZWL$14 billion. In simple terms, the number of Zimbabwean dollars is growing and mostly via bank balances. Exchange rates follow supply and demand. The government is conducting a witch when they should be looking closer to home.

Expect more

It is reasonable at this point to expect more to be revealed and adjustments to be made to mobile money rules. The Zimbabwe Stock Exchange cannot remain closed for long as this would decimate investor confidence. The reality is the damage has already been done with another rash move from the government all in the name of protecting the official exchange rate. You cannot unring a bell once rung.