RBZ reverses ban on money-to-cash transactions

16 Oct 2019

Zimbabwean dollars Zimbabwe’s central bank is re-allowing money to cash transactions, following three days of public petitioning and criticism against a previous ban. 

On Monday September 30, the Reserve Bank of Zimbabwe (RBZ) gave instructions for all mobile payment system providers to cease the use of cash in and cash out services. The move arrived as a result of mobile money agents allegedly aggravating the situation for citizens, by charging high rates with cash in and cash out payments and as a result reducing the value of the Zimbabwean dollar against other major currencies such as the greenback on the parallel market. 

Zimbabwean mobile money agents, especially those with the leading EcoCash platform, have been profiting off of the country’s cash shortages, by purchasing cash for the purpose of reselling to those with digital wallets at a premium of up to 50%. This means that when trying to access funds through these agents, mobile-wallet holders would only gain access to 50% of their total amount. This has resulted in high premiums on cash as well as hefty discounts for cash transactions in shops and retail outlets. 

Cash-out and cash-in refers to the process of exchanging mobile wallet funds into cash and vice versa. The role of mobile money agents is to make this process easier – agents obtain cash from lenders against their mobile money balances, referred to as ‘float.’ These agents then act as intermediaries, facilitating the process of depositing or withdrawing money by account holders to and from their mobile wallets.  

The RBZ lifted its ban following substantial criticism on social media and a High Court order listed by cassava Smartech Zimbabwe (EcoCash’s parent company). Despite the efforts to reverse the ban, there is still a limit of 100 Zimbabwean dollars per transaction on the cash-out service. This is down from a previous limit of Z$500 however, while the current operational cash limit remains unchanged. 

RBZ Governor John Mangudya said the central bank was working towards a system where the abuse of payment systems is avoided, in a press conference in Harare on Wednesday October 2. 

Mangudya noted that the RBZ will be supplying cash to the economy without charging any extra costs, adding that “in this regard, banks will exchange existing RTGS (Real Time Gross Settlement) balances for cash, thus maintaining the monetary base unchanged.”

The use of digital money is becoming more widespread across the whole continent, as mobile use in Africa continues to increase. 

As the Zimbabwean economy continues to struggle, mobile money has been vital for most daily transactions among Zimbabwean citizens. The country’s economy is highly reliant on its electronic systems and digital money, which is run by Econet’s EcoCash, boasting a 95% market share. It is estimated that over 5 million transactions a day take place, involving over Z$200 million.