In spite of its fast blossoming in Africa, in Zimbabwe, the most common cash-in and cash-out functionalities have just been killed off as the government battles to contain the country's economic crisis.
Mobile money has hinged on transactions including payments at supermarkets, to other merchants and cross transfers from and into bank accounts. Success cases include countries like Kenya and Tanzania with MTN also ready to toll out mobile money in Nigeria. Yet in Zimbabwe, this has been killed off by the government because the functions are being abused. Considering large chunks of the country's economy runs through electronic systems, with EcoCash amassing a whopping 95 per cent share, this is a huge move.
Zimbabwean mobile money agents have been capitalizing on cash shortages in Zimbabwe to buy cash for re-sale to mobile wallet holders at a 50 per cent premium. This means that when you try to access funds through the agents, you would only get about 50 per cent of the balance. On social media, the Zimbabwean government's move has drawn a lot a lot of criticism amidst the country's financial situation already in disarray.
Subsequently, this has resulted in high premiums on cash and also, occasioned heavy discounts for cash purchases in retail stores. However, the Reserve Bank of Zimbabwe fully backs its decision to freeze mobile money functionalities. It says that agents' engagement in illegal activities abusing the cash-in and cash-out facilities is compromising the national payment system.
Mobile money platforms such as EcoCash and M-Pesa have already helped scale up financial access for sub-Saharan Africa's large unbanked populations. With this recent move by the Zimbabwean government, there are big concerns with the government set to lose out on revenue from the 2 per cent tax on digital and electronic transactions.