Zimbabwe, in an attempt to control the spiraling inflation problem with its currency, is restricting mobile money and tightening controls for foreign exchange outfits. It is also disallowing the quoting of any prices other than its own currency, according to a report by Bloomberg.
On Monday (Sept. 30), the Reserve Bank of Zimbabwe said mobile-money services can no longer pay out in cash. The bank also narrowed the spread at which exchanges and dealers can change Zimbabwe currency, from 7 percent to between 3 and 5 percent from the official rate.
Some mobile-money agents were charging premiums of almost 60 percent, Finance Minister Mthuli Ncube told reporters. “We decided to close that gap of multiple exchange rates,” he said.
Zimbabwe is dealing with an inflation rate that some experts say is as high as 900 percent, as the country struggles to pay for enough food and fuel for its infrastructure. The Zimbabwe dollar dropped to a record low, with 15.19 to the U.S. dollar, down from the 2.5 when it was reintroduced in June.
The country had mostly been using U.S. dollars since 2009.
“Government is trying to control the sale of foreign currency, trying to control the parallel rate” to try and stem inflation, said Derek Matyszak, an independent governance consultant in Harare. “Government is swimming against the tide, there is a lot of pressure to re-dollarize.”
One of the largest mobile money companies in the country is EcoCash, which is operated by Econet Wireless Zimbabwe. It has about 6.7 million active users, out of about 14 million people. This is the first time since the company started in 2011 that users have not been able to use the service. Econet is currently weighing its options in terms of the new restrictions and told Bloomberg it is not ready to comment on the new regulations.