Uncontrolled Rates of Exchange in Zimbabwe led to Ban Mobile Money Services

Uncontrolled-Rates-of-Exchange-in-Zimbabwe-led-to-Ban-Mobile-Money-Services

The government control in Zimbabwe has once again led to the rise of economic crisis. Citizens of Zimbabwe are on the verge of removing money control from the government. All this happened when the government decided to ban the use of fiat currencies for mobile payment/money services, to handle the mismanagement going on in the economy.

Digital Cash Transaction To Be Banned

The government of Zimbabwe has noticed that several mobile money service providers are engaged into illegal trading of currencies at higher rates, than the exchange rates which are approved by Reserve Bank of Zimbabwe. Hence a directive was issued by the RBZ (Reserve Bank of Zimbabwe) instructing that no mobile money service provider is allowed to sell the government-issued currency to their customers residing in the country.

However, there can be major drawbacks of this decision on the economy. A substantial number of citizens depend on such services. Zimbabwe’s topmost mobile money service provider is Ecocash, which has a potential number of users counting more than 6.6 million. One can analyze the strength of mobile payment services as out of the total 14 million population of the country, the citizens having a bank account counts up to 2 million.

As per the statement company has filed in the High Court of Zimbabwe on Tuesday, this platform holds about the daily volume of 2 million active users with 7 million transactions per day. The statement added, that as Ecocash holds a significant stand in the economy, and the act of its removal would damage the economic frame adversely. This can lead to damage to life and opportunities. Ecocash’s doom will affect millions of loss in lives and finance.

The directive issued by RBZ has claimed that the objectives led to saving the interest of the public in economies national payment system is getting damaged by some of the deeds of economic agents. These deeds include the alleged practice of facilities such as cashback, cash-in and cash-out. Even the directive adds the unapproved charges on such services have terrible drawbacks to the economy. They have consequences such as the pricing of goods and services get distorted putting a negative impact on the operations of the overall payment system. And as a result of such acts, the RBZ has asked to stop all the services of cash-in, cash-out and cashback to have a stoppage on such acts.

Government’s Incapacity to Deal with Inflation

The lack of control over citizens forced the government to take such a decision. The RBZ has come to this conclusion after analysing its incapacity to deal with the activities going on in the black money market and their citizen’s behaviour of not complying with the rule of fixed exchange rates. To hide the actual value of its currency and the everlasting inflation, the government has to take this step of banning monetary mobile services. The inflation is growing at an exponential rate, as for the preceding year, it was 42% and as per data acquired in June, the inflation rate in Zimbabwe is 175%.

Zimbabwean citizens are left with options of digital currencies to surpass government control over money. The possible options to beat inflation is buying out major cryptocurrencies that are away from the reach of government. Such currencies suitable for citizens of Zimbabwe are bitcoin and bitcoin cash and more. These currencies can also be traded at exchanges using multiple methods like mobile transactions, cash exchanges, trading platforms, etc.

The citizens of Zimbabwe have seen the mismanagement going in the economy for quite a long time and now probably they would not let the government destroy the economy through their irresponsible behaviour.