In June this year, Zimbabwe banned all mobile money operations in the country and then proceeded to heap an allegation of money laundering on EcoCash, a company that drove 97% of all mobile mobile transactions in the country. EcoCash is owned by the country’s dominant telecom company Econet Wireless Ltd. In an order against the company, Zimbabwe’s police accused the company of creating fictitious mobile money, converting it to cash and then buying foreign currency on the black market before sending it out of the country. As a way of blocking this alleged loophole, the Zimbabwean government then issued a directive demanding all mobile money operations in the country to connect to a national grid or cease to exist. The grid, according to it, would be run by government-owned Zimswitch, which previously competed with and has been thoroughly beaten by EcoCash in terms of market share.
“In accordance with the provisions of the National Payment Systems Act [Chapter 24:23] and the Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations, Statutory Instrument 80 of 2020 (the Regulations), the Reserve Bank of Zimbabwe (the Bank) wishes to advise the public that it has designated Zimswitch as a national payment switch with immediate effect,” Reserve Bank of Zimbabwe governor John Mangudya, had earlier announced in a statement in July.
“All mobile money transmission providers and mobile banking providers are hereby directed to be connected to Zimswitch as provided for by section 4 of the Regulations.”
Now, barely six months after the integration-to-the-national grid order was given, EcoCash is back to the country’s central bank, in appeal, and of course, a request to be exempted from having to integrate into the national payment system ZimSwitch. According to the company, there is no need for it to be integrated into ZimSwitch considering its capacity to operate on its own, its national footprint and the ability to transact over 450 transactions per second.
EkoCash Zimbabwe
Read also: All Banned Mobile Banking Apps In Zimbabwe Now To Connect To Zimswitch To Remain In Business
Whether this plea will be listened to is simply a matter of time. For now, all mobile money agents remain suspended in the Southern African country. Merchants can only facilitate incoming transactions and are, however, compelled to move money into bank accounts before making payments.
The Reserve Bank of Zimbabwe still maintains its transaction cap for EcoCash’s customers at US$5000 per customer.
Zimswitch is the National Electronic Funds Switch for ATM’s and POS of Zimbabwe that serves not only the financial institutions who are its members and users but also provides an essential service to their customers; the Zimbabwean public. Zimswitch is also the oldest and most successful national switch in Africa outside of South Africa.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer