“To enforce NPS directive we might have to completely halt entire Ecocash service” Cassava

HARARE- Cassava Smartech, pioneers of mobile money in Zimbabwe which in turn is the sole service provider outside of government control, has taken a fight with the RBZ, following Monday’s directive.

On Tuesday, Cassava through their lawyers Nyambirai and Mtetwa filed an urgent chamber application with the high seeking an order to reverse RBZ’s directive for the entire mobile money industry to stop Cash In and Cash Out services.

The service which is the equivalent of agency banking is conducted by a network of independent agents who work for Commision on transactions by allowing subscribers to deposit ( cash in) and withdraw (cash out) from their mobile wallet, as in a bank.

Cassava’s Ecocash operates the largest mobile money service in Zimbabwe and perhaps the fastest growing on the continent. Ecocash boast of 10.5 million users , 6.4 million of which are active, representing almost 90% of Zimbabwe’s adult population. It agency network covers the whole of Zimbabwe at 50000 and processed transactions amounting to 30 billion in volume terms over the first 6 months of the year.

In a surprise move on Monday, RBZ through the National Payments System division gave a directive to all players to halt all cash in and cash out services within their platforms, a core functionality in a land with limited cash resources.

It said the move is designed to curtail illegal activities such as asking for a steep premium on cash out of up to 60%. The Bank argues that the activities are compromising the integrity of the financial sector and destabilizing the currency market.

In the filed papers opposing the move Ecocash said it will be pushed to halt the entire service to enforce the directive, implying the systems are integrated and therefore cannot easily be isolated from the retained services.

Government earn huge taxes from Money Transfers, a bulk of which is transferred via mobile money. A ban on Cash In and Cash Out will not affect Tax revenue , as ability to send and receive is reserved. It would therefore had been designed to maintain this specific flow. Cassava however will likely lose significant business if the matter falls out of its favour.

Cassava’s share price was eased slightly on Tuesday on the ZSE , following Monday’s move.

EQUITY AXIS NEWS

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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