It seems the ending of September was riddled with so many interesting developments. From fuel price hikes to the banning of Mobile Money cash-ins and cash-outs, it was indeed an eventful conclusion of the month. A communiqué to the effect that Ecocash cash-ins and cash-outs had been banned was issued by the RBZ on the 30th of September. This obviously sent shock waves across the whole country with people asking so many questions. Is this the right move to take? Where will people get cash then? Does it mean Ecocash has been banned? These are some of the many questions that dominated across the various social media platforms. In this article I look at some of the ways in which people have reacted to this ban, but first a brief look at the ban:

RBZ Bans Cash-Ins and Cash Outs

The ban, according to the RBZ, was necessitated by the realization that most people were now engaged in illicit activities by abusing the Ecocash platform. This was mainly in relation to the cash-in, cash-out and cash-back facilities. What was happening is that Ecocash agents were over-charging for cash-in and cash-out transactions. Cash sales were also not being banked under the excuse of offering cash-back services.  The charging of commissions outside prescribed modalities was also cited as a cause for price distortions. These reasons were enough for the central bank to order the discontinuation of all cash-in, cash-out and cash-back services with immediate effect.

Businesses, Ecocash And Economists React To The Ban

The first and obvious reaction would be businesses insisting on cash payments. No sooner had the ban sunk into people’s minds had most vendors started insisting on cash payments. This is not at all surprising because vendors need cash for getting their stocks – in fact; it is the suppliers who insist on cash. So with the ban in place, getting cash becomes even more problematic. Thus to avoid creating problems for themselves vendors would rather insist on cash payments. This is not just isolated to just vendors alone but this a trend that is most likely going to spread out to most businesses. In cases where cash cannot be insisted on businesses are simply finding a way of adding additional charges on the pricing of their goods and services.

Another interesting reaction is, of course, Ecocash which was bound to react anyways. Cassava Smartech (Ecocash’s parent company) has already filed its papers at court challenging the ban issued by the RBZ. In its papers Cassava Smartech even hinted on the possibility of completely shutting down the Ecocash platform. This reaction from Ecocash is not surprising at all because they feel they are being unfairly treated. Most of the arguments that they have are quite valid but I guess the biggest question is how they can restore sanity on their platform. I think if they can come up with and put in place measures to thwart cash selling by their agents then the ban would not be necessary anymore. This is because to a certain degree they are answerable to what happens on their platform.

There have also been interesting reactions from experts economists in the country. Some economists said the RBZ ban was a good move meant to manage cash shortages and to also have control on inflation and cash circulation. The rationale behind this was that the Ecocash agents were now fuelling the parallel market’s activities. Other economists applauded the central bank saying that it was about time that they step in and call the house to order. Some economists did not really okay the central bank’s move saying that it is their sole prerogative to ensure cash circulation is adequate.

Though the ban might be some way of triggering corrective action on the abuse of the Ecocash facility, it is not the real solution. The abuse of the Ecocash platform is symptomatic of the underlying problem which is an inadequate amount of cash in circulation. Without looking at many variables, the most immediate thought that comes to mind is that the central bank must simply increase the cash in circulation. This is where it gets all intricate because many variables fall into play. The government is at best in the thick of a gruesome catch-22 situation. Nothing is black and white anymore. It still remains interesting to see how the legal battle between the RBZ and Ecocash will play out.