From Ban To Backbone: Mobile Money Agents Lead Zimbabwe’s Currency Reboot

Zimbabwe’s financial landscape is gearing up for changes as mobile money agents, once vilified for exacerbating the collapse of the now-defunct Zimbabwean dollar, are poised for a remarkable comeback. This resurgence comes as the authorities, who previously banned their operations, are now turning to them to spearhead a bold initiative centred around the nation’s new gold-backed currency.

Under a proposal set forth by Zimbabwe’s Treasury, Econet Wireless Zimbabwe Ltd., backed by prominent entrepreneur Strive Masiyiwa, alongside state-owned NetOne and Telecel, will soon resume operations, reports Bloomberg Their mission: to invigorate the adoption of the ZiG, shorthand for Zimbabwe Gold, while simultaneously quelling the influence of the informal market.

Debuting on April 5, the ZiG marks the country’s sixth endeavour at establishing a resilient local currency in a span of 15 years. Its inception comes as a response to the precipitous decline of the Zimbabwean dollar, which had depreciated by a staggering 80% against the US dollar within the current year alone.

These agents, numbering in the thousands, faced prohibition in July 2020 amid allegations of imposing surcharges on transactions, particularly those facilitated by Econet’s Ecocash, the leading mobile operator. Such practices were implicated in triggering one of the numerous collapses of the Zimbabwean dollar, although the company has consistently refuted any wrongdoing.

In their reinstated capacity, these agents are to function as currency exchange bureaus, facilitating public access to small denominations of foreign currency for day-to-day transactions. Deputy Finance Minister Kuda Mnangagwa explained this, stating that individuals with Econet lines registered for Ecocash will be able to seamlessly convert between ZiG and US dollars at official exchange rates, without resorting to illicit channels.

While the move underscores Zimbabwe’s efforts to eradicate street market trading, which it blames for exacerbating previous currency crises, it also coincides with a crackdown on informal traders. The National Prosecuting Authority of Zimbabwe reports over 100 arrests of street traders across the country, predominantly in the capital city of Harare.

The precariousness of the informal market is underscored by street exchange rates, with the US dollar commanding a premium of 17 ZiGs compared to the central bank’s official rate of 13.48 ZiGs.

Featured Image Credits: The Standard