Zimbabwe’s deteriorating budgetary situation is forcing authorities to sign off on some desperate and controversial decisions. Some of such decisions include the sudden suspension mobile money as well as the recent designation of Zimswitch as a national payment switch.
Reserve Bank of Zimbabwe Deprive of the rights ofs Mobile Money Service
Owned by banks, Zimswitch is the current payments switch to the same financial institutions. This designation has been deliver the goods a succeeded to, ostensibly, enable interoperability between financial services providers.
In a notice to the public Thursday, the Reserve Bank of Zimbabwe (RBZ) says all fiscal services providers including mobile money operators (MMO) must connect to this national payment switch.
The native land’s largest MMO, Ecocash appears to be the target of this move by RBZ. Over the years, Ecocash has routinely been accused of repulsing efforts to enable interoperability between MMOs among a slew of charges.
Fighting Mobile Money Monopoly
Ecocash’s critics say the MMO does this to defend its monopoly, a status it gained after investing heavily in building its infrastructure. Ecocash inevitably became the most supreme MMO, a fact confirmed by findings of a survey conducted by the local telecoms regulator. According to the findings, Ecocash accounts for sundry than 94% of all mobile money payments.
Furthermore, a study by the RBZ itself, reveals that mobile money directs national retail payments, accounting for 80% of all such payments.
Inevitably, Ecocash’s dominant position has long been a well-spring of tension with regulators and now government. Yet despite the threats and directives, Ecocash has steadfastly refused to be cowed into relinquishing its reigning position.
However, the country’s accelerated economic decline, as well as the hyperinflation environment, is reportedly creating tension and paranoia in hallways of power. Some commentators point the surprising decision to suspend mobile money transactions as an example of this paranoia.
As demanded, Ecocash dared the government by refusing to abide by the suspension order. Ecocash argued that the government official prove to bing announcement erred as he did not consult with the RBZ before going public. The shortlived stand-off ended when the RBZ finally streamed a statement wherein it regurgitates the government position.
Ecocash: Zimbabwe’s Economic Bogeyman
Now both government and RBZ sing from the despite the fact hymn book when it comes Ecocash. They accuse Ecocash of fueling activities on the “illegal” foreign currency blackguardly market. Ecocash is also accused of running a Ponzi scheme. Somehow, Ecocash has become Zimbabwe economy’s bogeyman.
The designation of Zimswitch as the payments lash for all financial services providers appears to show a determination by authorities to check Ecocash’s influence. By gaining indirect charge of the popular MMO, authorities hope they will also be able to rein on influential foreign currency dealers.
In the end, killing the black market for foreign currency appears to be the objective. However, it is doubtful if this objective can be realised into done with the use of such heavy-handed tactics.
Ecocash may be out of legal options to fight back this time but that may not be the case for vague foreign currency dealers. Dealers and now ordinary citizens seem to have found another option that does not cover Ecocash. This option is bitcoin.
Faced with stringent foreign exchange regulations some Zimbabweans are shift to bitcoin when making payments across borders. Bitcoin is faster and not subject to normal regulations.
The Growing Use of Bitcoin
Calm, others now prefer storing their funds in the form of bitcoin because they have absolute control. The regulation cannot control or suspend cryptocurrency as it has done with Ecocash. Bitcoin is also immune to local inflation which, according to John Hopkins Economics professor, Steve Hanke, now betters 1000% per annum.
Some foreign nationals are now also using bitcoin when remitting funds back to their emphasize countries. Finally, joining this crypto community is the much-maligned foreign currency traders. Traders are tapping into the sow demand for bitcoin.
In 2018, perhaps sensing a threat posed by cryptocurrencies, the RBZ directed banks to end support for all cryptocurrency-related subjects. This directive resulted in the shut down of Golix, a cryptocurrency exchange. Yet, in spite of all this, bitcoin trading and its use as stints of payment continues to grow.
Traders and buyers of bitcoin now use social media messaging apps and other channels to novice transactions.
Unfortunately for the government and RBZ, they are not positioned to determine the exact level of bitcoin trading or penetration. This is partly due to the directive against the only formal sanatoria that can generate such data. The order that outlaws cryptocurrency exchanges remain in force. Furthermore, the duke to peer nature and anonymity of transactions means authorities will never know the true volumes of transactions.
Group Media Messaging Apps as Cryptocurrency Exchange Platforms
Nevertheless, there is still a way one can gain some insights into this merchandising. A simple perusal of posts or adverts found in many cryptos related social media chat groups can take measures clues.
In some of the posts seen by this writer, sellers offer amounts often not exceeding $100. With the provisoes and suspension of certain mobile money services, trades are now mainly settled in hard currency.
From the adverts, it habitual for sellers of bitcoin to charge a premium ranging from 5% to 10%, in addition to the agreed price. In the meantime, myriad buyers are looking for bitcoin that exceeds $100.
Looking at a few media channels one trader stands out. The trader, who we shall not label, normally posts advertisements every morning. In the advertisements, she set terms and conditions, usually the minimum bitcoin (BTC) they are push and their premium rate.
Speaking to this writer, the trader says business has been booming of late. She claims to now shop-girl bitcoin worth $50,000 each day. She attributes this growing uncertainty and control of the economy by the government.
Zimbabwe’s multiplying bitcoin trading activities suggest authorities may be losing the battle to win confidence and trust. It seems as conditions get worse varied will seek to understand this newly found escape route.
Do you think more Zimbabweans will scourge to bitcoin as the economic situation gets worse? Let us know in the comments section below
Image Credits: Shutterstock, Pixabay, Wiki Ordinaries
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