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Engineer Jacob Kudzayi Mutisi

ZIMBABWE’S cash crisis has created a need for financial inclusion. 

There is now a need to make banking services accessible and affordable to everyone in Zimbabwe and beyond, and has been a buzzword in the last few years. 

Technology-based financial services have propelled innovation to “bank the unbanked” making daily financial operations accessible and user-friendly for almost everyone especially Zimbabwe’s rural people who had no access to banks before. 

 With 96 percent of our transactions in Zimbabwe now being cashless and the mobile money dominating all the transactions performed, the Ministry of Finance and Economic Development has recognised the crucial role mobile money services continue to play in increasing financial inclusion.

The Government, is therefore, continuously working on building regulatory frameworks which enable such services to be available to all. 

According to the Reserve Bank of Zimbabwe (RBZ), the National Payment Systems (NPS), first quarter 2019 report indicates that 79 percent of all the transactions, were processed through EcoCash amounting to ZWL$11,28 billion. 

The RBZ Financial Inclusion Forum report of February 2019 states that 6,1 million people use mobile money with two million who do not have alternative financial services and have all their savings and transactions in the mobile money wallets.

 Zimbabwe’s NPS is dominated and highly dependent on the EcoCash mobile money platform which creates a significant national systematic and security risk. 

The mobile money sector in Zimbabwe operates as a closed separate system, with transfer of electronic mobile money balances to other mobile money platforms and banks being quite a complicated, tedious and costly process. 

This kind of domination and dependency has contributed greatly to inflationary pressures prevailing in Zimbabwe and is a factor that discourages national savings. 

 This kind of domination and dependency creates a severe impact on systematic risk resulting from the high level of concentration on the mobile money sector which was confirmed by the 24-hour outage of the EcoCash service on July 20, 2019 and the 72-hour outage during the EcoCash system upgrade which was started on the 17th of November 2019. 

This was confirmed when the Zimbabwe’s economy literally came to a standstill during the aforesaid days as most of the people could not complete economic transactions. 

 This was further compounded by the recent collapse of the Paynet system which controlled 80 percent of the nation’s banking/financial payment systems in Zimbabwe. 

This further illustrates the systematic risk in our national payment systems and the resulting negative impacts on Zimbabwe’s financial services and economy. 

 These kinds of challenges, create a national security risk to the country when we have one mobile money player controlling over 80 percent the country’s financial services. This domination can lead to social unrest if or when there is any system failure.

The closed nature of the Mobile money platforms has also greatly curtailed credit creation in the country as customers’ financial data from Mobile money platforms is not accessible to banks, micro lenders and other mobile money platforms mostly referred to as a Credit Reference Bureau (CRB). 

As such 6,1 million mobile money users cannot access credit and are unable to use their mobile money wallet balances and transaction history to access loans.

 There is a perception that Zimbabwe’s only currency, ZWL$ should be able to flow freely from bank-to- bank, bank-to-mobile money wallet and mobile money wallet to mobile money wallet so that it remains an effective medium of exchange. 

Due to the significant barriers placed by Ecocash restricting flow of funds outside their ecosystem, more than 80 percent of the country’s electronic transactions are moved from EcoCash-to EcoCash. 

With this kind of domination “EcoCash” in substance is now a separate currency, with the ZWL$ and EcoCash currency operating as two parallel monetary systems as Ecocash is not a part of the Zipit system and Mobile Financial Services (MFS) wallet-to-wallet interoperability is not yet in place. 

MFS Hub connects mobile money systems to each other and to money transfer organisations, banks and other financial institutions, enabling money remittances “TO” and “FROM” mobile money accounts.

To confirm this, there is the unofficial black market EcoCash forex rates that is different from the ZWL$ forex rates. 

 The solution to the risks and challenges of EcoCash’s domination as a national Mobile Money Service can be successfully mitigated by implementing the three solutions below. 

 The RBZ should implement the MFS wallet-to-wallet interoperability. 

The implementation of wallet-to-wallet interoperability will greatly reduce the systematic and security risks currently emanating from the use of mobile money in Zimbabwe. 

Mobile money subscribers will thereafter be able to move their ZWL$ freely from EcoCash wallet to One Money wallet and to Telecash wallet. 

This will result in about 40 percent of total wallet balances moving to One Money and Telecash within three months of implementation which will greatly reduce the national security and systematic risks currently prevailing in our national payment systems. 

The biggest economic player is the Government of Zimbabwe and will be the biggest beneficiary when there is a level mobile money playing field. 

Once subscribers have moved their mobile money wallet balances to another mobile money, they will then need to be able to use their ZWL$ held in their mobile money wallet freely across the country. 

The single largest economic agent in the country is the Government. 

It is vital in this regard that all Government ministries and departments, parastatals, local authorities, schools, and hospitals as well as Government-funded programmes like school grants and social assistance, register and make use of mobile money services.

This will foster the free flow of ZWL$ in the economy as well as greatly reducing the national systematic and security risks.

 There is now a need for financial inclusion where individuals and businesses have access to useful and affordable financial products and services that meet their needs.

By introducing MFS, Zimbabwe will make mobile money services more affordable and reduce the domination of EcoCash.