ZIMBABWE’S central bank has banned all cash back, cash-out and cash-in facilities as part of efforts to eradicate the buying and selling of cash at a premium.
BY BLESSED MHLANGA
“All mobile payment system providers and merchants are hereby directed to discontinue cash-in and cash out with immediate effect, furthermore all economic agents are with immediate effect, directed to discontinue cash back facilities,” said a statement signed by the Reserve Bank of Zimbabwe (RBZ) deputy director of financial markets, national payment systems Josephat Mutepfa.
The RBZ has blamed the buying and selling of cash as the central reason behind price distortions in an economy where cash has become a commodity.
“It has come to the attention of the RBZ that some economic agents are engaging in illegal activities … Notable activities include the buying and selling of cash through mobile money agents at high rates above approved charges of cash-in and cash-out with some economic agents not banking cash sales under the guise of cash back services,” the statement added.
Mobile money platforms have increasingly come under attack for allegedly facilitating the illegal selling of cash for up to a premium of 50%, forcing traders to peg their mobile money prices at that rate.
The RBZ said removing the cash-in and cash-out facilities was meant to bring price stability on the market.
“The charging of commissions outside the approved framework adversely affects the smooth operation of payment systems and have a negative effect of distorting pricing of goods and services,” the RBZ said.
Zimbabwe Congress of Trade Unions president Peter Mutasa said the RBZ intervention was untimely as the country was already in a vicious cycle.
“No amount of knee-jerk reactions will address the problems we are facing. In fact, all the interventions adopted so far will simply exacerbate the problem they intend to resolve,” Mutasa said.
“We need a well-planned economic plan that is inclusive, pro-poor and shared by many. We need to build confidence and sanitise the governance space. What the RBZ is doing is not new; the same institution blamed everyone else, but itself and government in 2007-2008. It went on the same spree and churned out statutory instruments weekly, if not daily, but it failed to reverse hyperinflation and local currency devaluation. So expecting different results from the same process is insanity.”
He said what the country was experiencing was a manifestation of Gresham’s law where the valueless and useless RTGS dollar and bond notes drove the desired US dollar out of circulation and inflation came as a result.
“No amount of regulations will challenge these tested economics laws. It is wasting time and burying the head in the sand. This actually deepens the problem and destroys the little we must save. We saw it in 2007-2008. Whoever is doing this or advising government is evil and unpatriotic,” he said, adding that the numerous pronouncements and criminalisation of trading choices was going to further erode the remaining confidence in the market, thereby, deepening the crisis.
“Worryingly, the target has been the small players who are striving to eke out a living while the big sharks (swim). This will simply entrench obscene inequalities we are experiencing and push many in the informal sector into abject poverty. Workers are literally working for nothing and these arbitrary policies are going to destroy the few remaining companies and jobs. It is completely illogical and citizens must just prepare for the 2008 financial and economic Armageddon.”