HomeBusinessMobile money payment limits frustrating business, consumers

Mobile money payment limits frustrating business, consumers



THE Reserve Bank of Zimbabwe’s decision to continue restricting mobile money transaction limits at a time inflation has been rising has negatively affected the ease of doing business and hurt small businesses and the marginalized.

In June, the Central Bank introduced a cocktail of measures, including limiting daily mobile money transactions to $5 000 as well as suspending the mobile money platform’s agent and merchant lines in what it said were measures to stabilise the local currency, which has been losing value against major currencies since its re-introduction a little over a year ago.

The measures affected the three mobile money service providers – EcoCash, OneMoney and Telecash. EcoCash is by far the most popular of the three mobile money services, with over 94% market share of mobile money users.

But since the ban, Zimbabwe’s annual inflation has since galloped to a 10-year high, coming in at 837,53% in July, up from 737,26% in June this year and pushing the price of goods and services through the roof, rendering the $5,000 transaction cap too low to pay for meaningful amounts of goods and services.

Business owners, farmers, consumers and experts this week said it was critical for monetary authorities to wake up to the reality and remove the restrictions on mobile money transactions as a way of promoting financial inclusion and improving the ease with which businesses operate.

“Farmers across the country are struggling to pay labour and buy inputs due to limits put on Ecocash. These days $5 000 is nothing really as they need to settle a lot of bills. But unfortunately there’s nothing our farmers can do,” Zimbabwe Farmers Union executive director Paul Zakaria said.

“We have tried to engage the Reserve Bank to reverse or review the ban and limits imposed on EcoCash, but nothing has moved since May,” he added.

The majority of people in Zimbabwe prefer to use mobile money, which is fast and convenient compared to the traditional banking system.

According to a 2014 Finscope survey, only 30 percent of the country’s adult population have access to banks. One of the main reasons for the large unbanked population in Zimbabwe is geographical inaccessibility (distance) and poor infrastructure, with many of the unbanked population living in remote rural areas.

This, combined with a lack of financial education, creates very high barriers to banking for the rural populations and for the farming communities outside towns.

However, the introduction of mobile money – in particular the introduction of Ecocash in 2011 – saw close to 11 million people using mobile money platforms, in a development that helped to address financial inclusion for the previously unbanked population. Mobile money has afforded the marginalized, the rural and the small-holder farming communities to be integrated into the country’s formal financial system and be able to contribute to country’s fiscus through various taxes and levies.

The financial inclusion fostered by mobile money services ensures that the economically and geographically marginalized have access to the same financial products and services as the well-to-do and those who live in big cities, and that all sections of society have fair and equitable access to goods and services, including such services as personal insurance and basic healthcare.

Thomas Shekete, who runs a hardware and grocery shop in Muzarabani said it was essential for the government to encourage, rather than discourage, the use of mobile money as most people in rural areas now depended on their mobile phones for their daily transactions and livelihood.

“With the rate at which prices are going up, customers are now only buying a few things due to limits imposed on mobile money transactions and this is affecting our operations,” he said.

“If you check around this area, very few business owners have point-of-sale (POS) machines as only a few people have access to bank cards. We rely mostly on Ecocash for the bulk of our business,” Shekete added.

The cost of POS machines – which involves a forex component as they are imported – and the fact that relatively few people in the rural areas possess bank cards, makes their use and wide adoption much harder and more expensive than using mobile money.

Yet the crisis caused by mobile money transaction limits has now spread to several towns and cities, with most retailers and supermarkets now demanding payments for goods in US dollars and South African rands, putting further pressure on the local currency.

Economic analyst Francis Mukora said the government’s claim that mobile money and Ecocash in particular was fuelling the parallel market rates has now been proved to be incorrect, after the official exchange rate moved from $57:US$1 in June to about $80:US$1 in August.

Our investigations show that US dollar is fetching upwards of $100 outside the official auction rate, as indicated by the price differential if one buys using the local currency, as compared to using the US dollar.

“One of the major problems we have in Zimbabwe is failing to properly diagnose the root causes of our challenges. Ecocash agents, merchants and players on the Zimbabwe Stock Exchange are not responsible for the devaluation of the Zimbabwe dollar,” Mukora said.

“The authorities must fix low productivity issues and implement policies that boost confidence in the economy. As long as the fundamentals are not fixed, we will continue to have high inflation, foreign currency shortages and a thriving black market,” the economic analyst said.

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