We’ve covered a number of positive steps and efforts being taken by Zimbabweans and the international community to help our country prepare for COVID-19.

Zim’s largest mobile network operator, Econet has opened an EcoCash line for people who want to donate to help during the crisis.

To donate to this cause;

1. Dial *151#
2. Select Option 2
3. Select Option 2
4. Enter Merchant Code (018533)
5. Enter Amount
6. Confirm

or use the shortcode; *151*2*2*018533*Amount#

Outside of the donations, EcoSure also announced a host of measures for nurses and doctors which include getting protective equipment, free Vaya transport, and education scholarships for health workers who pass away whilst working in public hospitals or clinics at this time.

The post Econet Opens Up Coronavirus Donations Line appeared first on Techzim.

A quick glance at the most recent POTRAZ telecoms sector reports makes it clear that EcoCash is still the mobile money service used by most Zimbabweans with a market share of 91.9% and 98.9% of the total value of mobile money transactions.

We were pretty surprised when it was brought to our attention (on good authority) that the Ministry of SMEs intends to distribute COVID-19 relief funds exclusively through NetOne’s OneMoney mobile money platform.

Whilst OneMoney has been on an upward trajectory the government disbursing these funds exclusively on one platform raises many questions.

For starters, NetOne only has 6.4% market share and the Ministry of SMEs intends to counter this by distributing NetOne lines first and then follow it up by funding those lines they would have just given to the beneficiaries of relief funding.

Whilst that seems like a great plan on the surface it discounts the fact that building a merchant network takes years of work – as evidenced by EcoCash. Currently, OneMoney’s merchant network simply isn’t as strong as that of EcoCash.

This begs the question, why not just distribute the funds using whatever platform citizens use? If a recipient is already on OneMoney why not give them the money via OneMoney and if they are on EcoCash instead why not use that? Heck, even those on Telecash (0.7%) should be able to get relief funds on their preferred mobile money platform.

The government did something similar with the $200 lockdown payments, announcing that the monies would be distributed to those who have OneMoney mobile money wallets.

The fact that a government entity would see this crisis as an opportunity to strengthen NetOne and OneMoney’s standing in the market is pretty telling of how government interference in local business is the order of the day.

Is this a good thing for OneMoney

For OneMoney this will be a double-edged sword. They’ll acquire a significant number of new customers because of this and some of these customers may continue to use the service after the money has been disbursed because of the cheaper transaction charges.

Inversely, a number of the beneficiaries will just return to their EcoCash lines simply because their relatives send them money via EcoCash and EcoCash has a superior merchant network.

From a product development perspective, NetOne will also take a hit because they are not earning these customers by making OneMoeny great. I mentioned before that EcoCash has built a merchant network and payment ecosystem over 7 years – that comes with many lessons and NetOne are being handed a customer base by the government instead.

The post Propping Up NetOne At All Costs, Gvt To Distribute COVID 19 Funds Exclusively Through OneMoney appeared first on Techzim.

EcoCash has announced that they will be removing processing fees for cash transfers designated as COVID-19 relief funds.

The move seems to be a direct response to the government choosing to exclusively distribute COVID-19 relief funds through OneMoney, the mobile money platform that rivals EcoCash.

EcoCash has moved to remove all processing fees for cash transfers designated as COVID-19 relief, to enable the Government, Non-Governmental Organizations (NGO)s and any other relief organizations to freely give the support to vulnerable groups and communities at no extra cost for the transfers.

EcoCash Press Announcement

We criticised the government’s move to solely distribute these funds via OneMoney because that brought in too much friction into the equation and it meant beneficiaries would have to learn to use a new mobile money platform which simply doesn’t

The wording in the Econet press announcement will make it seem as though this was solely about the recipients but for them being a part of the distribution chain for these funds helps their business greatly as it minimizes the chances of their network effects being broken.

The danger posed by the government’s earlier strategy to distribute via OneMoney solely was twofold;

Firstly, OneMoney would grow their user base exponentially overnight. With relief funds being disbursed to as little as 450 000 people and as many as 4 million – if the government manages to distribute the funds to every individual they intend to reach.

OneMoney’s new user base would also discover that the mobile money service has lower charges compared to EcoCash and chances are that would prompt them to switch to OneMoney permanently weakening EcoCash’s network effects.

Network effects are super important to EcoCash and right now the reason every person chooses EcoCash is simply because everyone else they know uses EcoCash. This is why EcoCash feels the need to remove all these fees and protect the network effects that have made their mobile money service an impenetrable monopoly.

Is EcoCash’s involvement in this process a good thing? Ultimately it is. In my article questioning why the government would solely distribute these funds using OneMoney I outlined the perfect scenario;

If a recipient is already on OneMoney why not give them the money via OneMoney and if they are on EcoCash instead why not use that? Heck, even those on Telecash (0.7%) should be able to get relief funds on their preferred mobile money platform.

Propping Up NetOne At All Costs, Gvt To Distribute COVID 19 Funds Exclusively Through OneMoney

This is as good as it gets – citizens get their money using whatever platform they prefer. But don’t think for one minute that EcoCash’s decision to scrap fees for the processing of these funds is an altruistic move. It’s a business decision that protects the interest of EcoCash and also happens to provide less friction for consumers…

The post Protecting Monopoly Through COVID-19: EcoCash Scraps Fees For COVID Relief Funds appeared first on Techzim.

Telecel rarely makes the news cycle for positive reasons these days and today is no different. It’s being reported that some of Telecel’s workforce got their salaries cut to just ZW$800 (around US$16).

Staffers allegedly received an email informing them that the cuts were due to pressures exerted on the business by Covid-19;

This mail serves to inform you that due to the lockdown, our revenues have declined whilst our fixed and indirect costs continue to increase. This has put a strain on overall business performance.

A decision has been made to immediately pay a provisional salary through Telecash for the month of April whilst analysis of the financials is being done. We would like to take this opportunity to thank all employees for their contribution as they work from home and those who have been physically present

Telecel email to staff

Receving your salary via Telecash is already a crutch in itself since the mobile money platform isn’t integrated as widely as EcoCash or OneMoney, meaning once those staffers have gotten their salary they can’t really use it anywhere.

The other option which is cashing out the money is also next to impossible with mobile money agents not working because of the national lockdown.

Unless the workers who received the ZW$800 via Telecash also have a ZIPIT card it seems like a sum that will end up stuck in their account and further lose value whilst workers make a plan to redeem the funds.

The post Telecel Cuts Employees Salaries To ZW$800 & Blames It On Coronavirus appeared first on Techzim.

Recently, Statutory Instrument 80 (SI80) was effected into law and among the big talking points is the fact that all mobile money operators will be mandated to connect to a national payment switch;

It shall be mandatory for every money transmission provider and mobile banking provider shall be connected to a national payment switch, as shall be directed by written notice by the Reserve Bank from time to time that enables interoperability of payments systems and services.

S.I 80 of 2020 – Banking (Money Transmission, Mobile Banking and Mobile Money
Interoperability) Regulations

The most talked-about feature of the national switch is interoperability. You’ll finally be able to send mobile money between EcoCash and OneMoney or Telecash without need for an agent. It’s important to note that this functionality is NOT yet available at the time of writing.

For a long time, EcoCash has resisted interoperability with Zimswitch and has functioned in a vacuum but because of a superior merchant network and the larger user base, they have been able to do so without consequence.

Now that interoperability is a must what are some of the outcomes we can expect?

EcoCash’s omnipresence finally threatened?

The ubiquity of EcoCash has always meant that when the time to choose a mobile-money operator came 9/10 people would choose EcoCash. Why? All your family and friends used EcoCash, every shop accepted EcoCash and so did every vendor which left consumers with very little choice.

Interoperability brings choice back into the equation. If it doesn’t matter which mobile money service your friend is using and shops/vendors can accept all services your choice of service is now determined by other factors. Price-conscious users might turn to the cheapest service provider whilst those less conscious of pricing might opt for the outright most seamless service providers.

Moral of the story is Telecash and OneMoney will have a chance to compete on service delivery and that’s something they’ve never had before. Whether that will actually result in a shift or not is another thing altogether.

Once upon a time in Kenya

In April 2018, Kenyan regulators made mobile money interoperability mandatory. In Q1 of that year, Safaricom’s M-PESA had a market share of 71.9% and the following quarter it dropped 69.1%.

By October of 2019, Airtel had clawed at M-PESA’s market share and it was down to 63.5% whilst Airtel the closest competitor grew from 21% to 24.6%. Not a huge difference but when you consider that Kenya has over 31 million subscribers, the significance of that movement becomes more apparent.

Will something similar happen in Zim? I don’t know. People have always clamoured for alternatives to EcoCash citing high charges but when the alternative presents itself we don’t know what it will look like or whether there’s actual appetite to switch over.

Kwese was one such project. Everyone wanted an alternative to DStv and one presented itself and failed miserably on two fronts – the content wasn’t good enough and the business model wasn’t sustainable.

Maybe being the alternative to EcoCash will come with the same issues, maybe not. Time will tell.

The post New Law Compels EcoCash- OneMoney Interoperability: Will It Change Things? appeared first on Techzim.

A number of tweets have led people to believe they can now send money from an EcoCash account to a OneMoney account directly (i.e without the need for an agent).

The above tweet is an example of the euphoria around this issue but it’s important to note that this has always been possible. Moving money from EcoCash to OneMoney isn’t a new thing – and you’ll have to go cash the money out physically at an agent’s booth.

That’s why the message above says;

Please cash out from a OneMoney agent by using voucher code…

Changes…

Fortunately though, changes are on the horizon. A Statutory Instrument effected towards the end of March is making it mandatory for mobile money services to become interoperable.

It shall be mandatory for every money transmission provider and mobile banking provider shall be connected to a national payment switch, as shall be directed by written notice by the Reserve Bank from time to time that enables interoperability of payments systems and services.

S.I 80 of 2020 Banking (Money Transmission, Mobile Banking and Mobile Money
Interoperability) Regulations

What does this mean in plain terms?

Put simply, an EcoCash user will be able to send money to someone using OneMoney and Telecash directly. Where you needed to cash out before, the balance will now just appear in your mobile money wallet the same way when someone on EcoCash sends money to another EcoCash user.

Anything else?

Another hack that was facilitated by EcoCash was to enable Telecel and NetOne subscribers to register for EcoCash – this has been possible since 2018, actually.

Speaking of hacks, if you want to buy your NetOne airtime using EcoCash you can do so by simply texting airtime to the Techzim WhatsApp Bot (+263717684274) or our Facebook page.

The post No, You Can’t Send Money From EcoCash To OneMoney – Here’s What’s Possible appeared first on Techzim.

The Herald reports that the Reserve Bank of Zimbabwe has closed down more (undisclosed) mobile money agent lines in a bid to arrest the deterioration in value of the Zimbabwe local currency.

According to The Herald, the Financial Intelligence Unit (FTU) of the central bank says that the agent accounts were moving large values which did not make sense in relation to the nature of businesses operated by the account owners. They quote a figure of $75 million being moved but they don’t specify over what period of time that amount was being moved.

Further the FTU says they got suspicious because volumes of transactions did not slow down in spite of the nationwide lockdown due to COVID 19. This reasoning does not make sense in isolation though. Some businesses actually registered an increase in the number of mobile money transactions as people were accessing products and services remotely instead of in person (paying by card or cash).

From The Herald:

“That is the law of the FIU,” said a source within the Reserve Bank who declined to be identified citing confidentiality. They want to ensure that people or businesses with the agent lines are bona fide entities and they have to prove the source of their funding.

Is it working?

The parallel market exchange rates haven’t skipped a beat even after the FTU instructed banks to freeze accounts operated by a number of businesses a few days ago. We will repeat again, nothing that the authorities do will work until they address the real issue leading to the existence of the parallel market in the first place.

A big portion of that real issue is that the population doesn’t trust the government and any currency issued by the government. And to be clear, the population has very good reason to be so mistrusting of Zimbabwean currency.

The post RBZ Freezes More EcoCash, OneMoney Agents- Strategy Still Not Working appeared first on Techzim.

Another day another confusing decision by the RBZ… The central bank has directed EcoCash and other mobile money service providers (think OneMoney, Telecash & MyCash) to freeze accounts belonging to agents with transaction activity above ZW$100 000.

Whilst at this point its fair to say we have become accustomed to such weird declarations and laws coming from the central bank, I’ll go on a limb to say this is one of the most senseless decisions they’ve made in a while.

ZW$100 000 amounts to around US$2000 according to the current parallel market rates. That is pocket change for agents who you expect interface with hundreds if not thousands of consumers per month.

Even going by the official interbank rate – which is pointless since agents don’t get money at that rate- ZW$100 000 still amounts to just US$4000. Cashing out anything above this threshold will mean an agent sees their account being frozen.

This is probematic because this means agents are no longer incentivised to facilitate more transactions and will make less on commission as a result. Less economic activity doesn’t sound like the solution to Zimbabwe’s turmoil.

EcoCash’s statement makes sure to note that they were not consulted in this directive as they obviously would not have agreed to such a directive which not only affects their business but also affects agents and consumers who will have less agents to offer cash out or cash in services because most will simply be banned due to this directive.

Let’s talk about that national switch for a moment

We recently wrote an article on the new national payment switch that the government is working on. One of the things we know about the switch is that the RBZ will have real-time access to monitor transactions and if their motivation for that is so that they can dish out such directives and enforce them more freely then we’re in trouble.

The post RBZ Freezes EcoCash Agent Accounts That Handle Above ZW$100 000 Per Month – Here’s Why That’s Dumb appeared first on Techzim.

EcoCash has filed an Urgent Chamber Application at the High Court of Zimbabwe taking the RBZ to court over the recent directive to freeze accounts belonging to agents with transactions over ZW$100 000.

An illegal directive

In the chamber application, EcoCash makes the case that they were not consulted before the RBZ made its decision and outrightly states that the RBZ doesn’t have the power to suspend EcoCash agents. The court application also points out that the agents haven’t committed a crime neither has the RBZ alleged that they have making the directive illegal.

The impact on customers

EcoCash also brings up the fact that more than anything this directive will hurt ordinary Zimbabweans citing the fact that EcoCash is relied upon by 11 million Zimabweans – a signifcant portion of which is unbanked.

The document mentions the financial loss that will be incurred by agents and ordinary citizens is great and will continue to grow as long as the directive isn’t suspended.

The post Breaking: EcoCash Takes RBZ To Court For Freezing Agent Lines appeared first on Techzim.

Most people were surprised by the Zimbabwe central bank moves to instruct EcoCash to freeze the accounts of all agents that process transactions above ZW$100,000 (about USD2,000 or USD4,000 when you use the generous official exchange rate) per month.

$100k is a crime

The problem with this directive is that it is just a blanket punishment. Effectively, the Reserve Bank of Zimbabwe is saying that if you are not a listed company, a bank, an international organisation or the government, then you are not allowed to transact above this arbitrary figure of $100k.

Even if there is just one legitimate business in this class, common sense tells you that it is not right nor fair to cut the service for that one business just to ‘catch’ the rest. It’s even worse. The central bank could have applied more targeted sanctions without punishing businesses for having high transactions. They had information on which accounts to target.

The RBZ didn’t follow up on suspicious transactions

A letter that was attached to the papers submitted to the High Court seeking reversal of the RBZ directive reveals that the central bank has not been acting on flagged accounts. The letter written to the Financial Intelligence Unit by EcoCash CEO, Natalie Jabangwe on the 24th of April 2020 says:

We note that, as shown in Table 2 below, since implementation of the new limits we submitted 17 STRs* and only five have been responded to with requests for additional information, the rest (12) we have not heard anything from you with some getting to a month old since submission. Prior to implementation of the new limits, since beginning of the year we submitted 68 STRs and got 22 responses with 1 case being referred to the police. In 2019 we submitted 100 and got 50 responses. Whilst we are fully aware of our obligation to detect and report and we will continue to do so, the low response rate can be disheartening and cause for concern to us especially when you then keep accusing us of not detecting and reporting cases of abuse of the platform.

*STR: Suspicious Transaction Report

Here’s an example of one of the reports ignored by the Financial Intelligence Unit:

All the example transactions that Jabangwe cites in her letter appear suspicious indeed. It’s surprising that the majority of them did not get as much as a follow up from the authorities. Of the 85 transactions flagged by EcoCash from January 1 up to the time of sending the letter, 32% had some sort of follow up and only one was reported to the police.

Is it that there are some untouchable individuals and businesses that can only be ‘accidentally’ caught up in a blanket drag net but not individually investigated without political or other consequence? I wonder what we will uncover if we thoroughly trace the final beneficiaries of some of these companies.

Even the police was surprised

In the same letter, the EcoCash boss wrote:

On 15th September last year, we were invited for a meeting at Criminal Investigations Department Headquarters (CID HQ) to discuss ways of ensuring that channel partners who were abusing the EcoCash platform were brought to book. We advised them the process that we follow in terms of reporting STRs to your office and we gave them statistics of STRs that we had submitted to your offices. They were impressed with the number of STRs we had submitted but expressed shock at the small number of Compliance Orders that they had received from your office.

The other major challenge they mentioned was the requirement of serving Compliance Orders as notices to offenders before any criminal proceedings could be done. The notice periods were 7 and 14 days depending with the offence. These requirements were affecting the effectiveness of the AML/CFT measures. We thus call on the relevant institutions to play their respective roles to ensure that there is combined effective collaboration in implementing the AML/CFT measures.

It’s curious that holders of very suspicious accounts were given up to 14 days notice to comply yet the RBZ issues an ‘with immediate effect’ directive that affects any business that has high transaction volumes.

When inconsistencies like these surface we are left to conclude that the RBZ lacks much moral authority to direct the freezing of accounts more so in a blanket manner as they have done.

The post RBZ Ignored Warnings About Suspicious EcoCash Agents For Months appeared first on Techzim.

So the story of the week has been the directive issued by the Financial Intelligence Unit of the Reserve Bank of Zimbabwe to EcoCash instructing them to freeze the accounts of agents that transact above ZW$100,000 (USD2,000 or USD4,000) per month.

Of course, EcoCash went to court to have the order urgently suspended. On Friday, the Reserve Bank of Zimbabwe submitted their opposition to the urgent application at the High Court of Zimbabwe. The papers filed by both parties show that gloves are off in this one. We already talked about how EcoCash accused the Financial Intelligence Unit of ignoring their reports on suspicious transactions submitted by the mobile money operator.

Currency manipulator at EcoCash

The opposing affidavit written by the governor of the RBZ makes a very serious and interesting claim. The governor mentions that EcoCash transactions fail to be effected immediately and this creates an opportunity for spinning money. Here is the interesting bit:

What the general public does not know is what happens in the interim. The funds that have not been credited to the vendor or the recipient are then available for trading on the Ecocash Platform in the foreign currency market. In effect, the delays allow a certain person, who was the subject matter of an investigation, to buy and sell foreign currency in the intervening period.

John Mangudya’s affidavit

Have there been delays on the EcoCash platform?

Definitely there have been delays on the EcoCash platform. There has never really been an explanation why such delays sometimes happen. The most affected transaction seems to be the wallet to bank transaction. Most times the money reflects in the receiving bank account immediately but on occasion this doesn’t happen.

The longest I have seen someone having to wait for their money to be reversed back into their wallet after a failed wallet to bank transaction has been 4 days. This is a very frustrating thing when it happens, calling the bank and calling EcoCash….

Three jars, two lids

Just because there are occasional delays in some transaction doesn’t prove the RBZ assertion. If indeed there is some entity within EcoCash that manipulates the system in order to use the funds caught up between sender and receiver to buy forex on the parallel market then there is a hole created.

Let’s call the mysterious entity Mr X. If I do a wallet to bank transaction of $100 and Mr X manipulates the system to delay my transaction and he takes the $100 to buy forex on the parallel market what happens? The EcoCash system will be left short of $100.

Eventually my money has to be restored and my transaction should be processed or reversed. That money has to come from somewhere else and perhaps that will be from another delayed transaction. However there will be fewer lids than there are jars. The situation worsens if Mr X keeps taking money out of the system to buy more forex.

The hole cannot be filled by Mr X’s black market enterprise being profitable. If Mr X trades with my $100 and increases it to $120 it doesn’t change anything because he can’t bring that money back into the EcoCash ecosystem as a replacement to my missing $100.

When he deposits that money, it is really just another deposit onto the platform which has to be honored in its own right. As such, that money cannot fill the hole created when my $100 was diverted.

There is only one way to fill the hole

The only way holes like these ones can be filled is by creating money out of thin air. Governments do this every time. This is why fiat currencies get the slack from crypto enthusiasts and the rest of them but that’s another story for another day.

Just to give perspective: From 2014 to 2018, the Zimbabwean government was digging this hole in USD terms because the country was using USD. The government was spending more than was coming in and there was no way of filling the gap because the RBZ cannot print USD notes. They did the next best thing: they printed fake USD currency, not even notes. They just started pumping make believe numbers into the system. Eventually the shortage of the notes became noticeable and they started printing bond notes until they gave up and then just declared that what we called USD yesterday is now called RTGS$ today and it became Zim Dollar (ZWL) tomorrow…

Is the RBZ accusing EcoCash of printing money? Can EcoCash do this? It’s hard to believe that EcoCash could pull this off under the nose of the RBZ. In fact if the RBZ makes this claim then effectively they indite themselves. If Ecocash has been printing money, it’s called counterfeiting and they should have been shut down, tried, convicted and jailed till kingdom come.

If Mr X is stealing and not printing money

If indeed the RBZ accusation is true and EcoCash is not printing money then it means Mr X is in a serious debt spiral- that hole cannot be filled! Is there evidence of this huge hole?

Mangudya says the hole exists

In his affidavit the Reserve Bank of Zimbabwe Governor says there are EcoCash agents that are overdrawn and EcoCash has failed to offer an explanation on why that is so. Oh yes, overdrawn agents are a smoking gun in EcoCash’s hand. It will be very interesting to hear what the financial services company says about that one.

The central bank boss says these agents are overdrawn by ZW$39 million. Using the current parallel market exchange rate this is USD800,000. This is not pocket change and needs to be explained. To be sure the money is above this USD figure given that this debt didn’t just happen right now whilst the exchange rate is where it is.

If Mr X exists what would I have done if I were him?

The only way I would think to close the hole is to keep the hole small at any given time and then to fill it with transaction fees. I would charge for transactions as normal and find a way to keep the money still on the EcoCash ecosystem. It would be a complex operation definitely but in theory it should work.

Why go through complexity though? Why wouldn’t I just not dig the hole at all and I just use my transaction fees to buy as much forex as I can? Why would I touch money on my platform, money that doesn’t belong to me and that will be difficult to replace without a currency printing machine that only a central bank can have?

The post A Certain Person ‘Spins’ Money When EcoCash Payments Delay Says RBZ Governor Mangudya appeared first on Techzim.

The fight between EcoCash and their regulator, the Reserve Bank of Zimbabwe is revealing if nothing more. Of course the current episode started with a directive from RBZ instructing EcoCash to freeze agent accounts that transact above ZW$100,000. EcoCash went to court seeking an urgent reversal, the RBZ responded and now we are here.

Reading the EcoCash lines and between them

The Econet group knows how to play in two arenas very well: the arena of the courtroom and the arena of public opinion. When EcoCash was served with the directive they didn’t hesitate to indite RBZ in the public opinion courtroom. They presented their issue:

11 million

EcoCash mentions 11 million customers in the above notice to the public and several times in the papers they submitted to the High Court. For example, EcoCash’s lawyer states this:

The directive hurts the -Zirnbabviiean population and the Applicant’s business. There is a seasonable apprehension of financial loss by 11 million Zimbabweans

This is not a very truthful position. EcoCash launched in 2011 and since then they have cumulatively registered about 11 million customers. That doesn’t mean in any way that they have 11 million customers that are prejudiced by the RBZ directive.

First, as at December last year the total number of active mobile money subscribers in Zimbabwe was 6.5 million. Active subscribers are defined as all subscribers that have performed at least one transaction in the 90 days prior. Yes, EcoCash has the lion’s share of this number but it’s not 11 million Zimbabweans as stated. Of course there are some subscribers that fall out of that 90 day window that are really EcoCash customers but the fact of the matter is that 11 million customers is a stretch. A good number of those subscribers already died for example.

Secondly, the RBZ did not say all agents must be shut down. We will come back to this point later. For now we will just acknowledge that EcoCash cannot claim that all their subscribers are affected by this directive when just a fraction of their agents are affected.

Thirdly, everyone knows that not much cashing in and cashing out is happening. No one is using cash that much in this country. Agents mainly exist to facilitate cash liquidation onto and off the platform. This is not happening anymore. In fact, the fact that so many cash in and out transactions are still happening is evidence that the RBZ suspicions are legitimate.

Generally no cash is changing hands when cashing in and out is happening except for forex. This is a public secret. It therefore means very few of EcoCash’s subscribers will have legitimate transactions affected by the directive. Yes, EcoCash is talking about how agents facilitate payment of bills etc. How do agents help customers pay bills? Subscribers can do these functions all by themselves.

O level math will tell you that the probability of any subscriber being affected is very low: Probality that agent transacted above $100k X Probability that customer needs to legitimately do a cash in/out.

Throwing around the 11 million number is EcoCash’s way of courting public sympathy and an attempt to catch the court snoozing.

53 thousand

Another number EcoCash has been throwing around at every turn is 53,000 agents. The total number of EcoCash agents is irrelevant because the RBZ did not say all agent accounts must be frozen. The number EcoCash should be furnishing the court and public sympathisers is the number of agents that transact above the ZW$100,000 per month.

In his affidavit to the High Court, Eddie Chibi, the CEO of Cassava Smartech (EcoCash’s parent) uses a lot of words to try to mask the fact that very few agents are affected:

The institutions that have transactional values of above ZW$100,000.00 per month but are exempted from suspension and freezing under the directive of 4 May 2020 only constitute 4% of the Respondent’s Agent base of those values of transactions. They are mostly located in urban areas and the rural people who form 65% of the country’s population will not be able to access service provided by these Agents. The Applicant and its customers will be severely prejudiced because 96% of the Agents will be disentitled from providing the Applicant’s services. The exempted Agents will not be able to fill the gap that will be created by the Agents whose accounts would be suspended and frozen in terms of the directive issued on 4 May 2020. As a result, the Applicant will suffer irreparable harm because it will not have enough Agents to offer its services. This will also harm the Applicant’s reputation and goodwill because it will not be able to provide services to all its customers as it usually does.

Those words are designed to lead to a false inference. It’s not 4% of agents that will be able to operate, it’s 4% of agents that meet the RBZ criteria. The exempted institutions are not too many (banks, listed companies, international organisations and government departments) we can infer that affected agents are somewhere between 2,000 and 5,000. Most likely closer to 2,000 and it’s possible they are even less than that number.

If the number was significant, EcoCash would have shouted it from the roof tops. By the way the part about how all exempted agents are in urban areas prejudicing rural folk is nonsense. How many rural agents are transacting above $100k? How many customers does EcoCash have in the rural areas in the first place? That line is meant to draw false conclusions.

A substantial weight of the EcoCash argument is based on the number of agents and how their absence affects 11 million Zimbabweans. This is sad because I believe EcoCash is right to challenge the RBZ directive. It is an irrational order that punishes people for nothing beyond the fact that they transact above a certain threshold. This is no different from being arrested for earning whatever salary you earn.

It’s sad that EcoCash chose to lace a legitimate challenge with some silly manipulation of the language and facts. Such action only detracts the conversation from the important points and we start pointing out these inconsistencies. For example, in his High Court affidavit, the RBZ Governor, John Mangudya called them out for not furnishing the court with the ratio of agents viz the directive under dispute. Part of his affidavit says:

It is telling that the applicant has not been candid with this Honourable Court by setting out in detail the so-called affected agents, their identity and their KYC documentation. This is because the applicant has not been complying with the law and is unable to produce this information. Without the information the applicant has not made out a case for an interdict

It’s not just EcoCash acting funny:

The RBZ not answering the question posed

The central bank is also doing its fair share of trying to twist the debate towards a different plane.

Strategy: attack EcoCash

The RBZ’s court strategy seems to be to just throw mud all over the place and attack EcoCash. The issue under contention at the High Court is whether the directive the Reserve Bank issued is a legitimate directive. I think it is beyond doubt that the directive doesn’t satisfy that standard.

Imagine POTRAZ (the telecoms regulator) one day waking up and instructing mobile network operators to switch off all subscribers who spend more than 10 hours on WhatsApp per month because WhatsApp is being abused to spread fake news. This is the same thing that Mangudya’s institution has done. A business is being treated like a criminal just based on volume of transactions.

EcoCash has questions to answer but…

Get me right, I am not saying that issues raised by Mangudya in his affidavit are not important. EcoCash has to satisfactorily answer the question of whether they are printing money or deliberately causing delays in transaction settling so as to divert money and spin it on the black market. However, the RBZ could have indited EcoCash as an institution instead of going after EcoCash customers in a blanket manner.

The Governor said:

The applicant can only operate the payment systems in a lawful way. Operating the payment systems unlawfully through a Ponzi Scheme and shadow banking amounts to a violation of the law and does not give rise to any rights that the applicant can seek to enforce in the manner sought

If there are such issues at EcoCash then why not bring EcoCash to book not EcoCash agents.

Added to that, the RBZ has not been following through to investigate suspicious transactions flagged by EcoCash. How then can they punish collective groups when they will not be bothered to investigate obviously suspicious transactions?

The bigger problem

Our central bank and our government will point to anyone else and everyone else before they admit that we are in this mess because of them. Are there unscrupulous agents on the EcoCash platform? Yes there are but why does opportunity exist for them in the first place? Even if EcoCash is shut down completely today, will we not see people at street corners changing currency? Will we not see the local currency in free fall? So Governor Mangudya the problem is not EcoCash, we have a bigger problem.

No noise please

I have to wrap this up by saying EcoCash and RBZ please ask and answer the right questions to each other before the courts and in the public. Don’t try to confuse us with noise.

The post Both EcoCash And RBZ Are NOT Being 100% Sincere And Truthful appeared first on Techzim.

Following the opening of the tobacco auction floors earlier this month, EcoCash has announced a promotion for tobacco farmers accepting their mobile money service as form of payment for their crop.

• Farmers getting paid more than ZW$30 000 stand a chance to win 1 of 30 tobacco seed for 1ha and 1 of 30 fertilisers for 1ha.

• Those getting more than ZW$50 000+ stand a chance to win 1 of 5 motorcycles or 1 of 2 tractors. This means in total there will be 67 winners during the promotion.

The promotional material in circulation doesn’t explain how long the promotion is valid for – Maybe it will last as long as the prizes are there or like prior EcoCash promotions there will be a weekly draw where farmers get to win the prizes on offer.

The post EcoCash Announces Promotion For Tobacco Farmers Receiving Payment On Their Platform appeared first on Techzim.

Here is a long letter charging EcoCash, its CEO- Natalie Jabangwe and Director (CEO of its holding company, Cassava Smartech) of crimes under Zimbabwe’s anti money laundering laws:

OVERVIEW

We write to advise you of the Financial Intelligence Unit (HU)’s intention to penalize:

(a) Ecocash (Private) Limited (Ecocash);
(b)Natalie Jahangwe, Ecocash Chief Executive Officer; and
(c) Eddie Chibi, Ecocash Director,

in terms of section 5 of the Money Laundering and Proceeds of Crime Act [Chapter 9:24] (the Act), for failure to comply with obligations imposed on financial institutions and their officers, employees, directors and agents.

Ecocash’s failure to carry out its obligations in terms of the Act is directly attributable to the incompetence, ineptitude and unprofessionalism in the execution of duty by its management and directors, more particularly

Natalie Jabangwe, the Chief Executive Officer, and Eddie Chibi, a director who plays a prominent role in the day to day operations of Ecocash. Natalie Jabangwe and Eddie Chibi are, therefore herein charged in their indi. idual capacities. jointly and severally with Ecocash, on all charges.

Failure to comply with any mandatory requirement of a circular, directive or guideline issued in terms of the Act (Item 26 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

On 4 May 2020. the FIU issued and served a directive on Ecocash titled “Suspension and Re-Registration of all Ecocash Agent Accounts with Transaction Limits of above ZWS100.000”.

This was after the FIU had noted the ongoing abuse of Ecocash agent lines for foreign currency parallel market activities, which Ecocash had failed to curb. despite persistent engagement and requests by the FIU. The FIU had noted that transactions of substantial value were being undertaken as between agent-to-agent, with no visible lawful purpose nor underlying business rationale.

Among other things. the directive required Ecocash to —
(a) suspend and freeze the accounts of all Ecocash agents with transaction limits above ZW$100,000 per month; and
(b)commence a re-licensing and KYC enhancement exercise in respect of the suspended agents.

Ecocash defied the directive by failing, refusing or neglecting to suspend and freeze the accounts of the high-threshold agents that fell under the categories referred to by Ecocash as “bulk-payers.”

Ecocash’s brazen defiance of a regulatory directive calls into question the suitability of Natalie Jabangwe and Eddie Chibi to hold prominent positions in a financial institution of the size and status of Ecocash. or, for that matter. any regulated financial institution.

Failure to comply with any obligation relating to customer identification and /or verification (Item 2 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014

Alternatively,

Failure to maintain books and records as required under section 24 of the Act (Item 2 of Table of Civil Infringements, AML/CFT Directive No. 2 of 20141

Alternatively,

Failure to timely avail to the FIU, upon request, books and records referred to in section 24 of the Act or any information contained therein (Item 14 of Table of Civil Infringements, AML/CFT Directive No. 2 of 20141

0n I May 2020. the FIU issued and served a directive on Ecocash titled “Directive to Freeze Accounts of Ecocash Agents Suspected of Involvement in Money Laundering and Illicit Transactions.”

The directive required Ecocash to freeze the accounts of 96 agents (listed under Annexure 1), each of whom the FIU had noted to have moved millions of Zimbabwe dollars during the 7-day period from 22 — 28 April 2020, whereby the transactions inconsistent with the purpose for which the agents were licenced and also inconsistent with the nature and size of their respective businesses.

The transactions, mostly by agents referred to by Ecocash as -bulk-payers” had no visible lawful purpose or underlying legitimate business rationale. The high-value, hyper activity in the accounts of the listed agents, were all the more suspicious in the context of the national lockdown, when most legitimate businesses were closed and financial activities were expected to be low;

Among other things, the directive required Ecocash to furnish the FIU, on or before 3 May 2020, with KYC information in respect of each customer including:
(a) Business address;
(b)List of the directors;
(c)Name and contact details of the CEO / MD;
(d)List of the shareholders
(e) List of the Ultimate Beneficial owners: and
(f) Nature of business and source of funds of each entity.

Contrary to the requirements of the directive, Ecocash and / or its management and directors, for no lawful reason. failed to comply with the requirement to provide the inibrmation referred to in 2.4 above, until after close of business on 15 May 2020, when Ecocash provided information falling far short of what was requested. In many respects, the information eventually provided was incomplete and contained glaring errors, by design or otherwise. See Annexure “2”

Even after taking two weeks to run around and put together some information. Ecocash still could not provide names of a CEO / MD even of one agent, nor the list of directors, list of shareholders and ultimate beneficial owners as requested by the FIU and as required by law. Although Ecocash in the end provided purported business addresses for some of the agents, in most cases the addresses were incomplete or patently false / fictitious.

Ecocash’s failures in this regard points to the fact that it did not collect and maintain customer identification and identity verification information and other KYC data as required under sections 15 — 18 of the Act, only started running around after being served with the directive.

If Ecocash had collected and maintained the KYC information as required by law. when opening an account, which is not borne by the above facts, then it should explain why it failed to avail such information timely, when requested by the FIU.

Failure to report a suspicious transaction as required in terms of section 30 of the Act: (Item 21 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

During the period from 22 to 28 April 2020. Ecocash agents listed in the first column of Annex: I. bearing agent numbers shown in the third column. conducted transactions in amounts specified the fifth column.

The transactions were suspicious and ought to have been reported to the FIU promptly. and in any case within 72 hour.. as mandated in section 30(1) of the Act.

Failure to report the transactions as required. is not only a criminal offence. in terms of section 30(1) of the Acts but also amounts to an administrative infringement in terms AML/CFT Directive No. 2 of 2014, item 21.

The transactions referred to above, as detailed under Annexure 1 were suspicious for one or more or all of the following reasons —
• Each agent conducted transactions of very high value in relation to their size and nature of business, with cumulative figures ranging between ZWS1.1910,068 to ZWS9.999,973 in a space of seven days.
• All the agents are obscure entities, therefore registering such high turnover in a matter of days ought to have roused Ecocash’s suspicions;
• The high turnover of transactions occurred when the country was under national lockdown, when most legitimate businesses were closed. Ecocash thus ought to have been suspicious of the hyper-active transactional behaviour of the agents during such a period;
• Ecocash did not have adequate KYC data of the entities to support a reasonable belief that the entities could legitimately transact such high volumes and high values in such short period:

Contrary to its legal obligation to report suspicious transactions, Ecocash did not report any of the highly suspicious transactions as summarised in Annexure 1.

Disclosing to a customer or to a third party that a suspicious transaction report has been, is being, or will be submitted to the Unit: (Item 24 of Table of Civil Infringements, AM L/CFT Directive No. 2 of 2014)

Section 31(2) of the Act prohibits a financial institution or any of its director. partner, officer. principal or employee, from disclosing to its customer or to a third party the fact that the financial institution has filed a suspicious transaction report to the FIU.

The provision reads: “(2) No financial institution or designated non-financial business or profession, nor any director. partner, officer. principal or employee thereof shall disclose to any of their customers or a third party that a report or any other information concerning suspected money laundering or financing of terrorism will be, is being or has been submitted to the Unit, or that a money laundering or financing of terrorism investigation is being or has been carried out, except in the circumstances set forth in subsection (3) or when otherwise required by law to do so.

This prohibition is one of the basic rules of financial intelligence which every financial institution and all its employees, let alone senior officers, ought to be aware of. Breach thereof is not only an administrative violation in terms of AML/CFT Directive No. 2 of 2014, it is also a serious criminal offence in terms of section 34 of the Act, which reads in relevant part —

Any person who intentionally or by gross negligence—(a) … or (b) … or (c) discloses to a customer or a third party information in contravention of section 31 (2); shall be guilty of an offence and liable to a fine not exceeding one hundred thousand dollars (US $100 000) or to imprisonment for a period not exceeding three years, or both such fine and such imprisonment.

Contrary to the law, on or about 6 May 2020, Ecocash Director Eddie Chibi, deposed to an affidavit in support of a court application filed by Ecocash against the Reserve Bank of Zimbabwe.

In his affidavit and by way of attachments thereto, Chibi intentionally or recklessly gave details of a number of suspicious transactions that Ecocash alleged it had filed with the FIU. The affidavit and annexures were filed with the courts and also published in online publications and / or social media.

Chibi’s actions, whether deliberate, reckless or in ignorance of his ad Ecocash’s legal obligations, amounted, not only to an administrative violation, but also a criminal offence. He had no lawful reason to publish details of suspicious transactions as he was not under any legal compulsion to do so. Ecocash did not need to name the entities in court papers or cite the facts of the cases submitted to the FIU.

If Ecocash felt it was necessary for the court (and the world) to know the entities and facts concerning the SIRs, at the very least. it should have sought a court order to authorise disclosure and / or publication of such intimation. a request that would almost certainly have been refused. in view of the legal prohibition.

Chihi’s criminal conduct (whether out of ignorance or out of contempt for the law or the regulator) is yet another indictment of his suitability to hold the position of director of a financial institution.

RESPONSE TO THE CHARGES

Ecocash. its Chief Executive Officer, Natalie Jabangwe and its Director Eddie Chibi. are each required to respond to all the 4 charges as set out above, within 7 days of receipt of this letter. stating whether you admit or deny the charges.

If you deny the charges, you are required to detail the grounds of your defense. The FIU may make a determination based on your submissions without having to call you to a hearing.

If you admit any of the charges. you may, if you wish, make submissions that you wish the FIU to take into account in assessing the appropriate penalty.

May you take note that some or all the charges cited herein also amount to criminal offences prosecutable in the courts of law.

O Chiperesa
Acring Director General
Financial Intelligence Unit

The post EcoCash CEO & Cassava CEO Charged Under Anti Money Laundering Law appeared first on Techzim.

The Financial Intelligence Unit has its daggers drawn against EcoCash. The unit’s Acting Director General wants his pound of flesh and he’s not taking any prisoners.

Background

Zimbabwe’s currency is tanking on the only market that matters in this country: the parallel market. This is not coming as a surprise to anyone except maybe the people whose policies have brought us here- those fellas prefer to live in denial. From their lofty place in denial, the powers that be namely the Reserve Bank of Zimbabwe and the FIU have decided that their scapegoat is EcoCash.

Just over two weeks ago, the FIU issued a directive for EcoCash to freeze the accounts of all agents that transacted above ZW$100,000 per month. This was USD4,000 at the time. Instead of complying, EcoCash rushed to court filing an urgent application to have this directive suspended.

In the intervening time, the RBZ issued new notes into the economy. As soon as they did that the local currency tanked further by 40%. Of course, in the eyes of the RBZ this is EcoCash’s fault. If only the authorities could see or at least entertain the thought that Zimbabweans don’t trust them. When they issue bank notes, the natural thing for the citizens to do is to reject such notes in favour of the USD. As with most economic phenomena, the doom prophecy by the public is self fulfilling: the currency crashes. But no, according to the RBZ, EcoCash is the responsible demon.

This brings us to now. The FIU wrote to Steward Bank, EcoCash’s sister company which is the mobile wallet’s sponsor bank for settlements. The letter instructed Steward Bank to limit agent to agent transactions on the EcoCash trust account among other things.

In another letter to EcoCash CEO, Natalie Jabangwe dated 19 May 2020, the FIU Acting Director General notified Jabangwe and her boss, Cassava CEO, Eddie Chibi of intention to impose administrative penalties on the two executives as well as on EcoCash itself. What are the charges and what do they mean? Is there a case to answer by EcoCash and its executives? Let’s explore that:

The charges

1. Failure to comply with any mandatory requirement of a circular, directive or guideline issued in terms of the Act (Item 26 of Table of Civil Infringements. AML/CFT Directive No. 2 of 2014)

When EcoCash was directed to freeze the accounts of agents who transacted above ZW$100,000 per month, the EcoCash management didn’t comply. Eddie Chibi instead approached the High Court seeking immediate reprieve and suspension of the directive.

In his founding affidavit, Chibi argues that the directive issued by the FIU was illegal. His key reason to conclude that is that EcoCash and its agents had not been heard. He wrote:

The Applicant and its Agents have a right in terms of the law to lawful and rational administrative action by the Respondent. This means that the Applicant and the Agents had a right in terms of the common law and in terms of the Administration of Justice Act Chapter 10:28 to be heard before a decision is taken that affects their rights in the Ecocash system. The right to be heard is a fundamental right in our law that is also protected by the Constitution of Zimbabwe, the supreme law of the land.

The respondent referred to is the RBZ

Chibi goes on to say that the directive issued by FIU was irrational in that it does not specify the crimes committed by the agents and would make it seem as if merely transacting above $100,000 per month was a crime. Repeatedly Chibi goes back to the issue of not having exercised his right to be heard and this seems to be the chief argument. He also says the ACT under which the directive was issued did not give the FIU power to make such a directive:

I contend that the provisions of section 10 only authorise the Respondent to act if the management of the system itself has done or omitted to do something. The Applicant is not punishable where some users of the system are alleged to have themselves committed an abuse. The approach, in that case, is to penalise defaulting users. In the present matter, no allegation of illegality has been made or proved against the Agents and in the absence of that, there is no basis for the Respondent to seek reliance on section 10.

He goes on:

Thirdly, the powers of the Respondent in terms of section 10(1)(i)-(iii) are limited. The Respondent can issue a directive directed against specific conduct, a directive for something to be done to remedy a situation or to provide the Respondent with certain information. The provisions of section 10(1)(i)-(iii) do not give the Respondent power to suspend an Agent from participating in the Ecocash system. in the event of a troublesome Agent, the directives that the Respondent can issue can be enforced in terms of sections 10(2)-(4) of the Act.

Whether or not Chibi is right doesn’t matter. The directive was issued and the directive should have been complied with whether or not EcoCash believed it to be legally flawed. EcoCash was well within its rights in going to court, they should have done so while still complying until the court decided to grant them the reprieve or ultimately the decision they sought.

It looks as if EcoCash gambled that their urgent application would sail through. The reality is that it didn’t and so, the first charge against them stands: they did not comply with a directive issued under an ACT of parliament.

It also doesn’t matter that FIU’s original directive was ridiculous. In January last year, Econet (EcoCash’s former parent and current associate) complied with an illegal and ridiculous directive to shut down the internet. Their argument was that they could not ignore it until a court decided on the legality or lack of it.

2. Failure to comply with any obligation relating to customer identification and /or verification (Item 2 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

The FIU leveled this one with alternatives:

Alternative A: Failure to maintain books and records as required under section 24 of the Act (Item 2 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

Alternative B: Failure to timely avail to the FIU, upon request, books and records referred to in section 24 of the Act or any information contained therein (Item 14 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

This one sticks. The FIU alleges that when they directed EcoCash to freeze accounts of agents that transacted above ZW$100,000 per month they also directed EcoCash to furnish them with KYC details for some 96 agents they suspected of illicit activities. According to the FIU, EcoCash stalled and did not meet the 2 day deadline to submit this information.

The FIU says EcoCash submitted incomplete information two weeks later. Chiperesa wrote:

Even after taking two weeks to run around and put together some information, Ecocash still could not provide names of a CEO/MD even of one agent, nor the list of directors, list of shareholders and ultimate beneficial owners as requested by the FIU and as required by law. Although Ecocash, in the end, provided purported business addresses for some of the agents, in most cases the addresses were incomplete or patently false/fictitious.

All this led Chiperesa and his unit to conclude that EcoCash did not have the relevant KYC documents which they should have had by law. This is in the realm of possibility when you consider the history of EcoCash’s founding. It started off as mostly a peer to peer remittances solution. Users would ‘cash-in’ just so they could send money to friends and relatives who would then ‘cash-out’ soon after receipt.

To make all this possible, EcoCash went on a massive drive to recruit agents who would facilitate the ‘cashing in and out’ in exchange for a commission. Most of the agents were small traders who already operated community businesses allowing them to have the necessary float to facilitate the transactions. Our speculation is that there wasn’t a rigorous KYC requirement to become such an agent and there probably wasn’t much need for such. These were micro transactions performed by a network of small businesses (Most of them informal).

EcoCash evolved though. It became first a wallet were users would actually keep their money- a bank account if you will. It wasn’t merely an instrument for sending and receiving money anymore. Beyond that, EcoCash became a payments platform in fact the most important payment platform as far as retail/consumer payments are concerned. Mobile money accounts for more than 80% of all consumer transactions and EcoCash has above 95% share of the mobile money volumes.

With the increased importance of EcoCash as a platform and the cashless situation Zimbabwe finds itself in, a lot more scrutiny has been placed on the mobile money service. The central bank itself alluded to the fact that EcoCash had become a full fledged financial services company.

It’s highly probable that there are some agents that were recruited over the years that had never submitted full details needed for KYC. Remember, agents are no longer simply intermediaries but they have become EcoCash customers themselves and as customers they must ‘be known’ to EcoCash.

It’s also probable that even recently KYC obligations were not taken as seriously at EcoCash because the culture that stuck during the moving fast days is not so easy to shake off. Added to the mix is the fact that some agents have outgrown the status they had when they first joined the platform.

EcoCash came up with tiers to distinguish agents from other agents and thus apply different KYC standards and transaction limits across. This process is more of a rationalisation and it cannot be simple.

So yes, I have speculated a great deal here but given the history of how EcoCash moved really fast and how things in Zimbabwe changed even faster this speculation is quite probable.

EcoCash probably needs to negotiate with the RBZ for some leeway and a process of rationalising KYC requirements over a more generous timeline. As it is, this charge against them sticks. They are wanting on this.

3. Failure to report a suspicious transaction as required in terms of section 30 of the Act: (Item 21 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

The FIU is alleging that some of EcoCash’s agents were doing high volumes of transactions during the lockdown when economic activity had actually slowed down. Besides the lockdown, FIU says the transactions were already suspicious because they were not tallying with the size and nature of business conducted by the listed agents.

This allegation is odd because Eddie Chibi’s affidavit to the High Court included an attached letter that Natalie Jabangwe had written to the FIU complaining about the FIU’s failure to follow up on suspicious transactions reported by EcoCash.

This one is a bit difficult to make a call on. Crimes of omission are difficult to determine.

4. Disclosing to a customer or to a third party that a suspicious transaction report has been, is being, or will be submitted to the Unit: (Item 24 of Table of Civil Infringements, AML/CFT Directive No. 2 of 2014)

The letter from Natalie Jabangwe to FIU that Eddie Chibi attached in his submission to the High Court has given rise to this charge. Jababngwe’s letter had samples of suspicious transactions that the FIU had not followed up on. The Acting Director General of the FIU says by attaching this letter including the sample transactions, Chibi was in effect notifying entities that had been flagged which he says is illegal. Chiperesa cites the law:

No financial institution or designated non-financial business or profession, nor any director, partner, officer, principal or employee thereof, shall disclose to any of their customers or a third party that a report or any other information concerning suspected money laundering or financing of terrorism will be, is being or has been submitted to the Unit, or that a money laundering or financing of terrorism investigation is being or has been carried out, except in the circumstances set forth in subsection (3) or when otherwise required by law to do so.

He is right of course that Chibi did not need to include these details in his application for an urgent interdict at the High Court. Chiperesa again rightly points out that if Chibi felt that the details were necessary he should have applied to the court to permit such disclosure.

Difficult one for EcoCash

I am no lawyer but all the charges leveled against EcoCash seem to be plausible. They all arise from the fact that when EcoCash received the directive to freeze accounts and submit KYC documents they didn’t comply. The only way out seems to be a ruling by the High Court setting aside the directive before expiry of the 7 day notice period given to EcoCash and its two executives to respond to the charges.

Is EcoCash the cause of our currency problems? Hell no! Zimbabwe’s currency is tanking for no other reason but the fact that our government and central bank are neither trusted nor trustworthy. Zimbabwe’s currency is tanking because several times our bank accounts were raided and real money in there was replaced by fictional money called bond notes or RTGS dollars or ZWL or whatever else will come later. This is where the distrust comes from.

However, the failure by EcoCash to comply with the FIU is a big problem for the mobile payments company. It will be interesting to see how they will come out of this one if they will.

The post Breakdown Of 4 Charges Leveled Against EcoCash, Its CEO And The CEO Of Its Parent appeared first on Techzim.

So yea the urgent High Court application made by EcoCash to reverse a directive given them by the Financial Intelligence Unit of The Reserve Bank of Zimbabwe has been thrown out. The first stumbling block EcoCash fell on is that according to the court they had no skin in the game.

The issue

One of the issues raised by the RBZ in response to EcoCash’s application is that it was the agents who had been directly affected by the infamous directive and not EcoCash. They argued that EcoCash was only indirectly affected (financially) and so they had no right to approach the courts on behalf of another. The issue as summarised by the judge:

The respondent asserted that the applicant does not have standing to seek to enforce the rights of its numerous agents who have not sought to advance their cause before this court. :It submitted that the basis upon which the applicant has brought the application in the interest of the agents has not been established. Mr Chinake argued that it was simply an attempt by Ecocash enforce its own financial interests.

On the other hand, Adv Mpofu contended that the applicant had demonstrated sufficient interest in the matter and its outcome to become before the court. He submitted that the agents were a key component of the functionality and operation of the ecocash platform. Thus, to the extent that the accounts of the agents had been closed, the applicant had a right to institute proceedings to interdict the actions of the respondent. Additionally, the applicant argued that its agents were threatening to sue it, hence it had locus standi to protect its rights.

Precedent against EcoCash

Judge Chinamora says the issue of whether EcoCash had any right to litigate on this issue had long been established before the court. One of the cases he cited said:

… an interest in the right which is the subject matter of the litigation and … not thereby a financial interest which is only an interest in such litigation

Well, according to the above standard it looks as if EcoCash and its lawyers needed to prove that they had interest above a mere financial interest.

EcoCash kept emphasising their financial interest

The judge actually says the answering affidavit filed by EcoCash ‘betrays’ them in that it talks of their financial interest. He quotes the affidavit:

Financial interests are also worthy of protection in terms of our law. It cannot be argued on boli fide grounds that the suspension of agents will not directly affect the income earning capacity of the applicant which is worthy of legal protection. Applicant has a contractual relationship with its agents in terms of which it earns income from the services performed by agents on its behalf

From EcoCash’s answering affidavit submitted to the High Court of Zimbabwe

Judge Chinamora made an interesting comment:

While the applicant might feel passionately about the financial strain occasioned by the directive, it is not the kind of interest that can found locus standi for the applicant at law.

Even EcoCash’s terms and conditions punched them in the face

One of the attachments EcoCash submitted to the court is their terms and conditions for agents. The document clearly spells out that the agents are completely independent from EcoCash. The judge quoted clause 7:

7. INDEPENDENT CONTRACTOR
7.1 The parties acknowledge that, save for the duties and powers of the agent as stated in clause 3 hereof, nothing in this agreement shall be construed to create a relationship of employment or partnership whatsoever between the parties, whether for tax or any other purpose.
7.2 Subject to clause 3 hereof, neither party shall have the right to bind the other to any agreement with a third party or to incur any obligation or liability on behalf of the other party

EcoCash agent terms and conditions

He asks how EcoCash could then attempt to sue the RBZ on behalf of agents when their own contract with the agents says they are completely independent of each other. How then is EcoCash harmed by the FIU’s directive against agents beyond EcoCash losing transaction fees? He quoted clause 3 of the same document:

The agent shall comply, at its own cost and expense, with all laws, license conditions and tfre requirements of any legislative body or government, provincial, regional or local authority relating to any matter contemplated in this agreement.

EcoCash agent terms and conditions

If the agents have beef with RBZ, the courts are open

In determining this issue of whether EcoCash was an aggrieved party that could challenge the action of the central bank, the judge again drew from the affidavit filed by Cassava CEO, Eddie Chibi:

The directive of 4 May 2020 will affect agents such as Transerve, Zuva, Total, N Richards,. rt-Metropeech and Engen amongst others who are driving the Zimbabwean economy but do not fall under the exemption mentioned in category 5

From Eddie Chibi’s affidavit

Judge Chinamora said references like the one above clearly show that EcoCash knew who the aggrieved parties were. He said if N Richards and the rest of them felt prejudiced by the RBZ they were free to approach the courts in their own capacity and right. EcoCash did not have that responsibility.

On this issue alone the fate of the application by EcoCash had been sealed. Judge Chinamora said:

I would have dismissed the application on this basis alone, however, I prefer to consider the other grounds for objection in case my conclusion is incorrect.

The post EcoCash Has No Right To Represent It’s Agents Before The Courts – High Court appeared first on Techzim.

3 weeks ago, the Reserve Bank issued a directive ordering mobile money operators to ban agents that were transacting above a threshold of ZW$100 000. After effecting the ban EcoCash would have to register once again to meet certain KYC demands.

EcoCash responded by filing an urgent chamber application to the high court seeking the reversal of the RBZ’s directive. Simply put. EcoCash was saying the directive was unlawful because the RBZ did not consult them beforehand and the impact of the directive on agents and the country’s economy would be negative.

There has been some delays in getting an outcome from the urgent chamber application but earlier today the High Court rejected EcoCash’s application.

After EcoCash filed this application, the RBZ fired back on the basis of the following five points:

1. Since EcoCash filed the chamber application after complying with the directive, RBZ argues the issue wasn’t urgent. RBZ also says the issue wasn’t urgent because EcoCash only filed the urgent chamber application on the 7th of May – 3 days after receiving the directive;
2. EcoCash failed to include the director of the Financial Intelligence Unit;
3. EcoCash doesn’t have the right to institute such an application;
4. EcoCash sought interim relief which was similar to the final order they were asking for;
5. EcoCash cannot prohibit an act carried out by operation of law

Justice Chinamora gave out his ruling after breaking down all five points

The issue of urgency

Following the RBZs stance after EcoCash had filed the urgent chamber application they highlighted the following; They complied with the directive so as to avoid legal trouble that would come with refusing. EcoCash’s position was to comply with the directive issued in terms of law and then challenge it afterwards.

EcoCash also highlighted that building their agent network had taken 9 years and starting from scratch would be expensive.

Lastly they also argued that the affected agents were not heard before the directive was issued.

The verdict: Justice Chinamora said EcoCash was right in complying and then challenging afterwards and accepted the mobile money platform’s stance that this was still urgent

EcoCash’s failure to cite Financial Intelligence Unit

The RBZ argues that EcoCash failed to cite the Financial Intelligence Unit and its Director-General who actually issued out the directive and should have therefore been a part of the proceedings.

Verdict: Justice Chinamora noted that a case cannot be dismissed because of non-joinder i.e the failure to cite an interested party

EcoCash has no right to issue such an application

RBZ argued that EcoCash has no standing to seek to enforce the rights of its numerous agents who themselves had not moved to advance their cause before the court. Simply put, the RBZ was arguing that they cannot understand why EcoCash is arguing on behalf of the agents and instead of protecting agents EcoCash is actually protecting its own interests.

EcoCash’s representatives argued that the agents are a key part of the EcoCash platform and closure of agent accounts resulted in their desire to prohibit such a move.

Another reason why EcoCash felt the need to issue out the application is because the agents in question wanted to sue the mobile money platform.

Verdict: Justice Chinamora supported the RBZs notion citing that, “EcoCash owns the platform while the agents enjoy the right of use of the platform as long as the applicant receives its fee per transaction.“. The judge therefore echoed the RBZ in that EcoCash had no right to issue such an application.

While the applicant [EcoCash] might feel passionately about the financial strain occasioned by the Directive, it is not the kind of interest that can found locus standi* for the applicant at law

Justice Chinamora

*Locus standi – the right or capacity to bring an action or to appear in a court.

The judge mentioned that EcoCash’s Agent T&Cs cite agents as independent contractors. He then asked why EcoCash should litigate on behalf of the agents if they are independent contractors?

In addition to that, Justice Chinamora highlighted yet another section of the T&Cs which outlines that agents will comply with all laws at their own cost. The judge said the directive issued out by the RBZ called for the closure of agent accounts because they were failing to comply with the law. This means affected agents should be the ones to seek application of the reversal of this order.

Lastly, the judge said Eddie Chibi’s affidavit in their urgent application was effective an own goal which “fortified” Justice Chinamora’s view that EcoCash had no right to issue the application.

Seeking interim relief for similar to the outcome the RBZ was asking for

The RBZ argued that EcoCash in their urgent chamber application sought interim relief that would give their agents access to continue operating. This is ultimately the same verdict EcoCash is seeking and therefore the interim relief and outcome are identical.

Verdict: Justice Chinamora explained that a certain section of the urgent chamber application requests that the Court prohibit the RBZ from enforcing the directive they issued banning agents. The problem is that is followed up by another section which asks the court “to uplift all restrictions imposed on the accessibility of the EcoCash system”.

The problem here is that the directive seeks to curtail abuse of agent accounts and so if the judge were to grant interim relief the agents would get access to their accounts and start using them. Chinamora says such a ruling would mean EcoCash has gotten effective protection before proving its case.

Court cannot prohibit a lawful act

The RBZ argued that if the High Court granted EcoCash the interim relief they sought amounts to preventing the RBZ from carrying out its duties.

Verdict: Justice Chinamora said the RBZ was right to hold this view and that EcoCash should challenge the directive by applying for it to be reviewed. The Justice said EcoCash chose the wrong method to challenge the directive by the RBZ and likened it to entering “through the back door and not the front door”.

Ultimately the judge dismissed EcoCash’s urgent chamber application and order that they pay the cost of the lawsuit.

The post Full Breakdown Of The High Court’s Ruling On EcoCash Application For RBZ To Reverse Directive appeared first on Techzim.

It has been an interesting yet unsurprising past couple of weeks for Zimbabwe’s most popular mobile money firm EcoCash.

The company has been in a row with the Central Bank which has claimed loopholes in the EcoCash platform have driven up currency exchange rates and devalued local currency – one of the major issues is regarding EcoCash’s handling of KYC (Know Your Customer) processes.

As reported by Constituency, ‘the allegations made by the Financial Intelligence Unit (FIU), EcoCash is failing or neglecting its obligation to carry out routine but thorough Know Your Customer (KYC) processes on users of the mobile money service’.

The RBZ says these failures have led to abuse of the platform and driven up exchange rates. The Reserve Bank of Zimbabwe told EcoCash to suspend all Agent accounts with transaction volume over Z$100,000 per month.

The double-edged sword that is “financial inclusion”

Agents pose a critical flaw when it comes to onboarding customers. This flaw exists owing to the contrast of aggressively pushing the ‘helping the unbanked’ narrative that’s become common in the financial industry, and the need to fulfil KYC guidelines as often issued by the Central Bank and other regulators.

In essence, the need to get as many customers as possible, overrides the need to on-board the right customers (i.e. identity verified users) and in the EcoCash saga, this was and still is the case.

Agents who for long were seen as a necessary pillar in providing liquidity to the mobile money ecosystem have now been abusing the system with black-market transactions under the guise of false identities and enterprises.

This has all been happening under the watch of EcoCash and cousin operators, why keep it that way though? Simple, large transaction volumes equal profit, and more worryingly, nobody seems to really know who is behind these transactions; thus, the full wrath of the Reserve Bank of Zimbabwe (RBZ).

Can blockchain offer a better KYC alternative?

When we started our journey to bring FlexID to the world and in broader context, blockchain powered self-sovereign digital identities, we knew organizations i.e. financial institutions; banks, insurance, telecom companies etc. would all be facing the same challenge sooner or later.

Take KYC for example, the problem with a mobile money company or bank having an internal KYC process is that it is easily subjected to: 

• Corruption (registration agents can easily be bribed to enter false information or even create ghost accounts themselves) and even;
• Negligence (punching in typos in the raw data or not thoroughly checking documents).

Identity fraud is the biggest crime, where unscrupulous entities falsify identity documentation to access Agent lines or bulk mobile wallet accounts.

The question is, how can an institution know if the documents are authentic? Today’s process would require back and forth communication with central ID registries, tax authority, company registrar etc, all time consuming and virtually unscalable. The shortcut (as done by numerous firms) is to simply request for these credentials and take them at face value in order to ‘comply’. We’ve now seen, this has dire consequences!

With self-sovereign identity, the solution is to use Verifiable Credentials (VCs), who’s Issuers can be traced back and trusted, with virtually no room for falsification.

A FlexID is a Digital Identity Wallet that stores these Verifiable Credentials as issued by trusted authorities i.e. only organizations in our network can issue a credential. By knowing: Who the issuing organization is; Who the holder/ receiver of the credential is and; What the data the credential contains, organizations such as banks and telecom companies can leverage the Flex Network to verify the authenticity of users in their ecosystem.

It nullifies the gamification of the KYC process as one cannot simply spin up a false ID or false company registration documents as a cryptographically signed signature by an Issuer would be required for registrations.

It is imperative that EcoCash and other organisation realise the need to have secure, verifiable solutions and partner with trusted parties which would ensure the integrity of data in their ecosystems and potentially increase the right customer base.

Author bio

Victor Mapunga is a serial entrepreneur, Co-Founder & CEO of FlexFinTx (www.flexfintx.com), a Blockchain & Digital Identity firm, creators of FlexID. A renowned expert & pioneer on blockchain in Africa, he’s been a speaker at the Blockchain Africa Conference, presenting on the practical application of digital identity in the financial industry

Twitter: https://twitter.com/victor_mapunga

LinkedIn: https://www.linkedin.com/in/sirvicmapunga/

The post Can Blockchain Offer A Better Alternative To EcoCash’s Agent Problem? appeared first on Techzim.

USSD menus are pretty outdated when you consider the way we usually navigate on smartphones. The fact that you have to remember the codes and then the clunky interface which is prone to user error – the experience is mostly forgetable.

But since USSDs offer real utility they are not going anywhere anytime soon so we just have to get used to them. Or do we? Well, this is where Tosa comes in. Tosa is an application that tries to repackage the way USSD works. Instead of clunky menus, you now get an interface that packages the USSD codes and hides them away in the background whilst the user only gets to see a clean and minimal black/white UI.

Essentially think of the EcoCash app or the Instant EcoCash application and you have a good idea of what’s going on here.

Tosa allows EcoCash, Telecash and OneMoney users to do the following;

• Check Balance
• Send Money
• Pay Biller
• Cash-out
• Buy airtime
• Buy electricity
• Access banking services

A future update will also allow users to buy bundles and pay merchants through the app. At the time of writing, this makes Instant EcoCash the best application of this kind for EcoCash users since it has both of those features already. Both Tosa and Instant EcoCash work offline which is another benefit since the official EcoCash application requires an internet connection.

For NetOne users there is also the OneMoney mobile application and NetOne applications which offer some of those features and compelling features like tariff calculators. In my short experience with the NetOne app, it was pretty buggy and crashed whenever I tried to access certain menus so I can see Tosa might be attractive to OneMoney users.

Telecel also has an application – but that was last updated a year ago and the review of the application complains about the app needing internet access for certain features.

Download Tosa for Android

The post Frustrated At Having To Remember USSD Codes For EcoCash? Try This App Instead appeared first on Techzim.

You remember when a good number of EcoCash customers woke up to messages that said they had successfully registered for EcoSure and so a dollar had been deducted from their wallets. That was strange because most of these folks had not tried to register for EcoSure!

A repeat?

Here is an example of what a number of EcoCash customers woke up to today:

You can find many similar cases being brought forward on social media for example when you search for this on Twitter.

What is this?

This doesn’t seem to have just happened today. Such cases seem to have existed since 2018 at least. A customer was affected by this last week and here is the response they got from Cassava Smartech on Twitter:

Hi there. Kindly note the funds were deducted for recoveries. You made a banking transaction which registered as failed and so we reversed the funds back into your Ecocash. However, the funds later credited to your bank, meaning your received the funds twice instead of once. The recoveries are correcting that, so please engage your bank for further assistance

This is crazy!

The explanation given to the customer above is logical and perhaps valid. However, this does not in any way exonerate EcoCash. They should have communicated far better than to just send a message that “the customer has successfully made a payment” to some account no one knows even exists.

If indeed customers had double dipped, it’s EcoCash and their banking partners’ fault. As such, they should have sent out messages that explain that this is what happened and therefore they will be recovering the funds. Just sending a message that claims that a customer has made a payment is just not acceptable. It would have been better if the message said “We have deducted this amount to recover blah blah blah”

We have reached out to EcoCash to find out what’s going on and we will update when we get a response. This is disappointing to say the least.

The post EcoCash Customers Wake Up To Money Deducted Into A Strange Account appeared first on Techzim.