HARARE – Ministers have recently issued threats against Econet’s mobile money service, EcoCash, whose agents are accused of charging desperate Zimbabweans looking for cash a massive premium of up to 60 percent.
“EcoCash manager may face arrest if her business continues to inconvenience the public by charging exorbitant transaction costs,” deputy information minister Energy Mutodi tweeted on September 17.
Now, Econet founder Strive Masiyiwa has responded, placing the blame squarely at the feet of the central bank which he says has starved the market of cash creating opportunities for arbitrage.
Masiyiwa maintains that EcoCash does not own the money being paid out by agents.
The billionaire was confronted by an EcoCash customer, Liveit Ndlovu on Facebook, who wrote: “US$1:$12 bond cash, and US$1:$20 EcoCash. EcoCash agents are charging 60 percent. I think it’s time to act on that issue Sir.”
This was Masiyiwa’s response:
“We cannot solve a problem until we first understand it:
♦ EcoCash is not a currency. It is simply a mechanism that money moves through. You don’t dig up a road, simply because a thief came on a road. EcoCash is just a road for money, it is not the money.
EcoCash does not have any money. The cash [bank notes] money belongs to the agent. EcoCash does not print money, either physical or electronic. That is done by the RBZ. They decide how much banknotes are in circulation. If there are not enough, then they must supply them, until there is enough supply.
♦ Why is there such a shortage of banknotes in the first place, that it becomes possible to sell banknotes? Why? Where in the world does that happen?
Give me a break my friend, you are smarter than that! Who created such an arbitrage situation?
♦ Whose cash is the Agent selling, at that rate?
♦ How does Econet police 50,000 agents? Who can do it? No-one, because that is not the problem. Ask the RBZ to address the supply of these banknotes, if you believe that is the problem.
What if we stopped them all from dispensing any cash, would it solve the problem? Why do the banks not dispense cash like banks around the world? Why?
♦ If the State withdrew its electronic money that moves through EcoCash and replaced it with physical notes, would it solve the problem?
♦ When an agent sells his money at 50 percent premium, does he share the upside with EcoCash? Of course not! If you show me that anyone at EcoCash is involved and benefits, that is another issue. But that is not what is happening.
Let’s first understand the problem: This is simply symptomatic of hyperinflation. In case you have not realised, Zimbabwe has the highest hyperinflation in the world right now.
If you address the causes of hyperinflation, this problem disappears.”