Zimbabwe’s central bank has ordered all banks and mobile money transmission providers to connect to the National Payment Switch. The desperate and controversial decision could inadvertently boost cryptocurrencies in the country.
The Reserve Bank of Zimbabwe (RBZ) issued a public notice Thursday. It ordered all financial service providers, including mobile money operators (MMO), to connect to Zimswitch. Banks own the platform the government wants everyone to switch to. As per the bank, the designation will ostensibly, enable interoperability between financial services providers. The statement read:
“All mobile money transmission providers and mobile banking providers are hereby directed to be connected to Zimswitch as provided by section 4 of the Regulations. To ensure seamless integration, all money transmission providers and mobile money providers must complete the necessary installation or deployment or commissioning of infrastructure and connection protocols, credentials, and documentation to connect to Zimswitch by no later than 15 August 2020.”
The Inevitable Scapegoat
Critics believe that Ecocash, the country’s leading MMO, is the target of the move by RBZ. Players in the industry accuse Ecocash of frustrating their efforts to facilitate interoperability between MMOs, to name a few charges. Ecocash controls between 80% and 94% of the cash transfer market has gained a monopoly of investing heavily in infrastructure.
Ecocash has inevitably become the scapegoat for both the government and the RBZ. They accuse the firm of fuelling illegal financial activities in the Forex black market. Nonetheless, the country’s main problem is the economic decline borne of corrupt politics and hyperinflation. Many commentators are calling the surprising decision to suspend mobile money transactions as an example of this paranoia.
The Option is Bitcoin
By choosing Zimswitch as the remaining payments switch for all financial services providers, the government appears to stamp its authority to check Ecocash’s influence. RBZ hopes to rein on influential Forex currency dealers by gaining direct control of the popular MMO. The main objective appears to be eliminating the black market for Forex. Zimbabweans doubt that the use of heavy-handed tactics will succeed where persuasion has failed.
As Ecocash runs out of legal options to stop the government from achieving its objectives, people will look for alternatives. Citizens and dealers have settled on an alternative that doesn’t include Ecocash; the option is Bitcoin.
Zimbabweans have switched to bitcoin for cross border payments since it’s not subject to government regulations. Others prefer storing their funds as bitcoin because they have absolute control. The government cannot control or suspend cryptocurrency as it has done with Ecocash.