By Lloyd Takawira
The Reserve Bank of Zimbabwe has defended its stance of closing some agents saying the mobile money transfer platform Ecocash, a subsidiary of ZSE-listed Cassava Smartech, is violating banking laws .
The Central Bank said Ecocash has agents who have an overdraft on their Ecocash accounts in excess of ZW$39 million, funds the central bank believes are used to buy foreign currency thus fueling the distorted exchange rates .
In its heads of arguments in response to an urgent high court application for a final interdict made by Ecocash, the RBZ governor John Mangudya said Ecocash agents have been involved in devaluing exchange rate on the Ecocash Platform thus destroying the livelihood of the Ecocash subscribers .
The Central bank closed all agents accounts that transacted for more than $100 000 per month with the exceptions of select categories. However the payment platform argued that this had crippled its business and said that the measures were not the solutions to the problems that the country was trying to solve.
According to the opposing papers filed by the RBZ , it has been discovered that Ecocash Platform, payments can remain outstanding for periods of between three to seven days, which Mangudya said unduly prejudices the same population that the platform
“What the general public does not know is what happens in the interim. The funds that have not been credited to the vendor or the recipient are then available for trading on the Ecocash Platform in the foreign currency market. In effect, the delays allow a certain person, who was the subject matter of an investigation, to buy and sell foreign currency in the intervening period.”
Mangudya said investigations have established that there are some Ecocash agents who have an overdraft on their Ecocash accounts in excess of $39 million. This begs the question: “How can an entity or individual have an overdraft on an electronic payment platform such as Ecocash?”
Mangudya said on this basis, Ecocash had breached the law thereby negating any rights that it has. “The applicant can only operate the payment systems in a lawful way. Operating the payment systems unlawfully through a Ponzi Scheme and shadow banking amounts to a violation of the law and does not give rise to any rights that the applicant can seek to enforce in the manner sought.
Meanwhile EcoCash in its defence papers accuses RBZ of moving too slowly In dealing with suspicious agents.
In a letter that was attached to the papers submitted to the High Court seeking the reversal of the RBZ directive to freeze accounts of all EcoCash agents that process transactions above ZW$100 000 per month, EcoCash CEO, Natalie Jabangwe revealed that the central bank was lethargic in its response.
In the letter, dated 24 April 2020 and written to the Financial Intelligence Unit, Jabangwe said:
“We note that, as shown in Table 2 below, since the implementation of the new limits we submitted 17 STRs* and only five have been responded to with requests for additional information, the rest (12) we have not heard anything from you with some getting to a month old since submission”.
“Prior to implementation of the new limits, since the beginning of the year, we submitted 68 STRs and got 22 responses with 1 case being referred to the police. In 2019 we submitted 100 and got 50 responses”.
“Whilst we are fully aware of our obligation to detect and report and we will continue to do so, the low response rate can be disheartening and cause for concern to us especially when you then keep accusing us of not detecting and reporting cases of abuse of the platform” reads Jabangwe letter .
In the same letter, Jabangwe revealed that even police detectives were shocked. She wrote:
“On 15th September last year, we were invited for a meeting at Criminal Investigations Department Headquarters (CID HQ) to discuss ways of ensuring that channel partners who were abusing the EcoCash platform