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Zimbabwe Shuts Down Popular Mobile Money Service InnBucks

April 22, 2022

Zimbabwean central bank governor John Mangudya

Zimbabwe’s central bank, which is battling inflation-inducing exchange rate distortions, has shut down the country’s popular mobile money transfer service, InnBucks, for operating without a license.

InnBucks, which is operated by fast food franchisee Simbisa, is a mobile platform that uses USSD and mobile application technology to enable consumers to send and receive money as well as make purchases at fast food locations.

Mobile money has grown in popularity as a convenient way to store and move US dollar funds across the country.

However, the Reserve Bank of Zimbabwe (RBZ) has declared that it will suspend operations a week after the EcoCash mobile money platform — operated by telco Econet Wireless — got authorisation to accept foreign currency cash-in and cash-out.

“The Reserve Bank of Zimbabwe (the Bank) wishes to inform the public that it has directed Simbisa Brands (Private) Ltd to immediately suspend operations of the money transfer service branded or styled InnBucks,” Zimbabwean central bank governor John Mangudya stated on Wednesday night.

Mangudya explained that the RBZ directed InnBucks in November 2021 to “ask for and secure appropriate approvals to continue operating the service.”
The RBZ is Zimbabwe’s central bank and has been putting the screws on mobile money carriers, accusing EcoCash at one point for igniting parallel market currency rates.

“Simbisa has not yet regularized the service as directed, necessitating the Bank’s inevitable regulatory involvement. Customers will no longer be able to deposit funds into their InnBucks account or transfer funds to third parties as a result of the service’s termination,” Mangudya stated.

With a huge and increasing user base, InnBucks is providing a service that was previously unavailable due to delays in approving telco-owned mobile money operators to offer foreign currency mobile money transfer services. Many still rely on traditional money transfer providers and banks, which demand exorbitant fees.

RBZ has extended a grace period to consumers, stating that “customers may redeem their balances for cash or merchandise at Simbisa Brands (Private) Ltd locations within a 30-day period” beginning yesterday.

InnBucks and Simbisa issued a statement in which they stated that they “continue engaged with the regulator regarding their license” concerns. Regrettably, an impasse has formed, and the Simbisa Board is contacting the regulator in an attempt to resolve the matter quickly and amicably.”

InnBucks Zimbabwe InnBucks Zimbabwe

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh

Zimbabwe Accuses Largest Mobile Money App Ecocash Of Money Laundering

July 20, 2020

It is now becoming clearer that Ecocash, a mobile banking solution which holds about 97% of the country’s mobile banking market share and which is owned by the country’s dominant telecom company Econet Wireless Ltd might have been the target of the recent ban by the Zimbabwean government on mobile banking. Police in the Southern African nation have accused Econet Wireless Ltd., of money laundering, demanding a list of its subscribers and issuing a search warrant against it.

“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,” RBZ 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.”

Here Is What You Need To Know

This is the latest of the clash between the government and Econet whose money transfer service, Ecocash, facilitates more than 97% of transactions in the southern African country. Zimbabwe government says the activities of the mobile banking service are contributing to the rapid depreciation of the national currency.
In an order against the company, the 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 the country.
On June 26 the country banned most of those transactions and has now said it plans to force Econet’s Ecocash unit to use a government-run money-transfer platform. While Econet competes with state-owned companies, its market share dwarves theirs.

Switch To A “National Mobile Banking Grid” Or Cease To Exist

According to governor John Mangudya, “To ensure seamless integration, all money transmission providers and mobile money providers must complete the necessary installation or deployment or commissioning of infrastructure and connection protocols, credentials and documentation for connection to Zimswitch by no later than 15 August 2020.”

Zimbabweans have been using social media to question if Zimswitch is not another scam meant to benefit the elite.

A quick check on the Zimswitch website gave the following results:

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.

Zimswitch was formed upon the signing of a partnership agreement of 8 local financial institutions dated 7 March 1994, to facilitate the shared use of automated teller machines (ATM’s) and point of sale (POS) facilities throughout Zimbabwe.
• On the 31 March 2001 Zimswitch converted to a private company, incorporated in Zimbabwe. A newly formed company, Zveringa Systems (Private) Limited, was purchased for this purpose. This conversion to a company was undertaken both to enable faster decision making and to allow for the introduction of a business partner.
• In February 2002, after an extensive evaluation, the partners awarded the business to Fintech — the technology arm of the Loita group at the time, represented in Zimbabwe by the Loita Company, EFTCorp. The In 2002 the replacement of the existing proprietary technology with the new version of an EFT solutions platform called Postilion was undertaken. This platform enables growth and development of the business as required to meet the new challenges. EFT Corp also provides the necessary consultancy, services and ongoing support to Zimswitch in respect of the EFT software. Zimswitch is 100% operated by LXS and majority owned.

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.