The government of Zimbabwe suspended transactions on mobile money operators who dominate payments in the country and halted the local stock exchange, as it accused both of being involved in a conspiracy to sabotage the collapsing currency.
President Emerson Mnangagwa’s administration said on Friday that it had suspended transactions on the services with immediate effect in order “to deal with malpractices, criminality and economic sabotage”, in a dramatic raising of the stakes in a long-running currency crisis.
About four-fifths of all payments in the cash-strapped southern African economy go through mobile money, according to central bank and regulatory data. Tens of millions of mobile transactions cover groceries, wages and other basic payments each month in an economy plagued by long queues for physical cash at banks.
Ecocash, a service established by Econet Wireless, the mobile-phone company that was founded by Strive Masiyiwa, the Zimbabwean businessman, has more than nine-tenths of the market.
Mr Mnangagwa pledged to be “open for business” when he rose to power after the 2017 military coup that overthrew Robert Mugabe, the dictator whose misrule kept Zimbabwe isolated for decades.
But his government has returned to international pariah status because of repeated abuses by security forces and corruption scandals that have shut off its access to financing.
An attempt to revive a local currency after years of dependence on the US dollar has collapsed, with a revived Zimbabwe dollar failing to garner popular trust. It has lost almost all of its value in the past year and has traded at about 100 to the US dollar in the black market, versus a fixed rate of 25 that the central bank recently abandoned.
As a result, inflation has hit more than 750 per cent, leading to a surge in the local stock market as investors sought protection in owning claims on real assets.
Mr Mnangagwa’s government said that it possessed “impeccable intelligence which constitutes a prima facie case whereby the phone-based mobile money systems of Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy.”
“Ecocash, in particular, is acting as the centre pivot of the galloping black market exchange rate and therefore fuelling the incessant price hikes of goods and services that are bedevilling the economy and causing untold hardship to the people of Zimbabwe,” the government said.
Ecocash, which has come under rising regulatory pressure in recent months, has always denied wrongdoing. Zimbabwe’s stock exchange did not immediately respond to a request for comment.
This year the IMF broke off monitoring of economic reforms that could have unlocked international funding for Zimbabwe after it uncovered repeated money-printing by the central bank that hit the currency’s value.
Part of the money-printing benefited a company controlled by a close ally of Mr Mnangagwa, according to people familiar with the country’s dealings with the fund.
More recently the government has been embroiled in a deepening corruption scandal over alleged looting of Covid-19 related resources. The government has said it is investigating the allegations.
The Mugabe regime also suspended the stock exchange during the depths of the hyperinflation in 2008 that destroyed the original versions of the Zimbabwe dollar. Trading resumed in early 2009.
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June 26, 2020 at 02:49PM
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Zimbabwe suspends mobile money transactions - Financial Times
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