Zimbabwe Is Cracking Down On Mobile Money Platforms In Order To Keep Its Currency From Depreciating Further
Zimbabwe is cracking down on mobile money platforms in order to keep its currency from depreciating further
A crackdown on social media and mobile money platforms is being carried out in Zimbabwe in an effort to save the country's depreciating currency value. The government holds the 'illegal currency dealers' responsible for the country's currency, the Zimdollar, being worth so little.
The Zimbabwean dollar has been in free fall against the US dollar, despite achieving some stability in recent months, according to the World Bank. In a statement released on Sept. 21, the governor of Zimbabwe's Central Bank, John Mangudya, stated that certain individuals were "abusing mobile telecommunications services and other social media platforms to promote and facilitate illegal foreign currency transactions."
The Reserve Bank of Zimbabwe has now blacklisted approximately 30 individuals for "illegal" foreign currency dealings and alleged money laundering transactions in an effort to curtail the actions of these individuals.
For a period of two years, it has also ordered banks to identify and freeze all accounts operated by these individuals, according to the court. They came to this conclusion after conducting research on social media platforms such as WhatsApp groups that were promoting the transactions.
This is not the first time that this has happened in the country's fiscal policies. To combat illegal foreign currency trading, the Reserve Bank of Zimbabwe (RBZ) announced a permanent ban on mobile money agents in the country on January 1, 2020, as part of its new monetary policy measures to combat illegal foreign currency trading.
Although bitcoin and other virtual currencies are popular for use cases such as remittances, international trade, and humanitarian disbursements, Zimbabwe's central bank has already prohibited banks from processing cryptocurrency transactions.
Many Zimbabweans, particularly those who lack confidence in the local currency, have turned to the US dollar as their preferred currency. Official exchange rates for the Zimbabwe Dollar (ZW) on the central bank's weekly auction are 1:86 to the US Dollar, according to the Zimbabwean government (USD). On the black market, however, one US dollar is worth ZW$168.
The majority of businesses prefer payment in US dollars, but they do offer customers the option of paying in local dollars, albeit at a rate that is higher than the official conversion rate. The increase in the rates on the parallel market frequently results in increases in the prices of basic commodities in the country.
Zimbabwe, on the other hand, has maintained the operation of bureau de changes despite the country's foreign currency shortages, in contrast to Nigeria, which has prohibited Bureau De Change services from selling foreign currencies due to currency shortages.
Following complaints from some bureaus de change that they have become "greedy" in their pursuit of higher profits, the Nigerian central bank decided to take action. The bank claims that the demand for foreign currency has put pressure on the naira and the country's foreign exchange reserves. However, two weeks after the order was issued, the Naira-to-dollar exchange rate remains high.
When it comes to Zimbabwe's economy, mobile money remains critical. The country is experiencing cash shortages at the banks, which has resulted in daily and weekly cash withdrawal limits, with Zimbabweans being forced to exchange their Zimdollars for US Dollars before making critical payments.
It remains to be seen whether this new order will make a difference, given that this is not the first time the government has taken action against currency brokers and dealers. Each time, it has resulted in inflation and a rush to buy Dollars in response to the fear of losing their purchasing power.
