Abu Dhabi, UAEWednesday 15 July 2020

Zimbabwe stops stock exchange trading and mobile money transactions to stabilise currency

Inflation in the southern African nation is at 786% and its economy is forecast to shrink as much as 10% this year, according to the World Bank

A man counts a wad of the new Zimbabwean ten-dollar notes. The country announced a sharp rise in the price of fuel last week following the launch of a foreign exchange auction system, which eroded the value of the local currency and caused inflation to surge. AFP
A man counts a wad of the new Zimbabwean ten-dollar notes. The country announced a sharp rise in the price of fuel last week following the launch of a foreign exchange auction system, which eroded the value of the local currency and caused inflation to surge. AFP

Zimbabwe suspended most monetary transactions on mobile-phone platforms and halted trade on the local stock exchange in an effort to stabilise its currency.

The measures come two days after President Emmerson Mnangagwa warned his government will tackle “malpractices” that he said have undermined his government’s efforts to end an economic crisis. Inflation in the southern African nation is at 786 per cent, its recently revived currency has collapsed, and the World Bank estimates the economy will shrink as much as 10 per cent this year.

The suspension of monetary transactions by companies including Econet Wireless unit Ecocash will “facilitate intrusive investigations, leading to the arrest and prosecution of offenders,” the Ministry of Information said in a statement Friday in the capital, Harare. Other companies affected by the regulations include state-controlled Telecel.

The government is in possession of “impeccable intelligence which constitutes a prima facie case whereby the phone-based

mobile-money systems of Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy,” the ministry said.

The measures will remain in place until mobile-money platforms have been “reformed to their original purpose and all the current phantom rates of exchange have converged into a genuine rate of exchange that is determined by market forces under the Foreign Currency Auction system,” it said.

The Zimbabwe dollar has slumped to 57.35 per US dollar after a currency peg of 25 to 1 in place since March was abandoned.

“These unprecedented measures have been necessitated by the need to protect consumers on mobile platforms, which have been abused by unscrupulous and unpartisan individuals and entities to create instability inefficiences in the economy,” Zimbabwe Reserve Bank Governor John Mangudya said in an emailed statement.

The bank said merchant transactions that can continue include payments for utilities such as water, power and airtime of as much as ZW$5,000 a day. “Bona-fide transactions will be processed normally,” Mr Mangudya said.

Ecocash said in an emailed statement it would expect a directive of this nature and significance to be communicated by the Reserve Bank of Zimbabwe. With more than 10 million registered users, it’s the country’s biggest mobile-money operator and it said clients should “remain calm and continue to do lawful transactions as usual.”

Zimbabwe Stock Exchange chief executive Justin Bgoni said he hadn’t been officially informed of the measures and could not comment. Telecel chief executive Angeline Vere said she was unaware of the announcement.

Updated: June 28, 2020 08:17 AM

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