ECONOMISTS have welcomed the halting on Monday of EcoCash’s cash-in, cash-out and cash back facilities by the Reserve Bank of Zimbabwe (RBZ).
Zim Morning on Tuesday spoke to a number of people in the capital, with most of them expressing mixed feelings.
Economic analyst Victor Bhoroma said the move by the RBZ was aimed at managing the cash crisis in the country while also trying to clamp down on inflation as well as improve money supply in banks.
“The RBZ is looking for ways to manage the current cash shortages, while also controlling inflation and money circulation. They feel that mobile money agents are driving the black market rates,” Bhoroma said.
“I see the recent reaction by the RBZ as a move to deal with the cash situation that was getting out of hand as shown by the astronomical increase in the prices of goods and services. Consistent with its primary role of ensuring price and financial services sector stability, the RBZ had to stamp its authority in a reactionary manner to deal with the burning issue which had reached disturbing levels,” said another analyst, Persistence Gwanyanya.
Ecocash agents get a commission from mobile operators, hence they end up getting more in terms of percentage premiums per transaction.
So, by eliminating these transactions, it means agents would no longer be able not overcharge.
Economic analysts say the solution to the problems of money circulation are a responsibility of the RBZ, who have to keep a balance on the market through stability in cash flow but should also be careful as the increase in notes and coins could fuel inflation.
“The solution lies with the RBZ increasing the notes and coins in circulation so that people can get money from their banks. However, the problem is that the increase will lead to inflation and money ending up mostly being in the informal sector,” said another analyst.
This has come about after the RBZ announced on Monday that it was halting all EcoCash cash-in, cash-out and cash-back facilities with immediate effect.
This decision was made following illicit practices by some agents to buy and sell money using mainly the EcoCash platform.
Meanwhile, the level of cash in circulation should be between 10 percent and 15 percent of money supply in the economy and the RBZ has already indicated its intention to gradually increase the amount of cash to those levels.
At the current level of ZWL600 million, the cash in circulation is way below the ideal range of ZWL1.5 billion and ZWL2.25 billion, with the total money supply currently standing at around ZWL15 billion.
Analysts agree that the move by the RBZ would come to naught if the black market still existed and agents be operating.
