Econet founder Strive Masiyiwa has advice for critics attacking his mobile money platform EcoCash over premiums charged by agents: sort out the country’s inflation crisis.
Taking advantage of cash shortages, EcoCash agents have been charging premiums of up to 60% on the value of cash-outs, well above authorised commissions. EcoCash has reacted by withdrawing the licences of 4000 agents, but this has done little to solve the problem.
EcoCash has handled over $78 billion since launch in September 2011 and accounts for 98% of all mobile money in the country. It takes up the bulk of electronic transactions; by volume, mobile money currently makes up 82% of all payments.
This means the crisis over agents was always going to attract attention. The Zimbabwe Anti-Corruption Commission wants to investigate EcoCash agents, and an eccentric deputy minister is threatening to have EcoCash managers arrested.
But, reacting to a question on the premiums on his Facebook wall on Thursday, Strive Masiyiwa said EcoCash was not to blame.
Below is his response:
Question: US$1:$12 bond cash, and US$1:$20 eco cash. EcoCaash agents are charging 60%. I think it’s time to act on that issue Sir
We cannot solve a problem, until we first understand it:
Number 1: EcoCash is not a currency. It is simply a mechanism that money moves through. You don’t dig up a road, simply because a thief came on a road! EcoCash is just a road for money, it is not the money! EcoCash does not have any money. The cash (bank notes) money belongs to the agent.
EcoCash does not print money, either physical or electronic. That is done by the RBZ. They decide how much bank notes are in circulation. If there are not enough, then they must supply them, until there is enough supply.
Number 2: Why is there such a shortage of bank notes in the first place, that it becomes possible to sell bank notes?! Why?! Where in the world does that happen?! Give me a break my friend, you are smarter than that! Who created such an arbitrage situation?
Number 3: Whose cash is the Agent selling, at that rate?!
Number 4: How does Econet police 50,000 agents? Who can do it? No one, because that is not the problem. Ask the RBZ to address the supply of these bank notes, if (you) believe that is the problem. What if we stopped them all from dispensing any cash, would it solve the problem?
Number 5: If the State withdrew its electronic money that moves through EcoCash, and replaced it with physical notes, would it solve the problem?
Number 6: When an Agent sells his money at 50% premium, does he share the upside with EcoCash? If you show me that anyone at EcoCash is involved and benefitting, that is another issue. But that is not what is happening.
Let’s first understand the problem. This is simply symptomatic of hyperinflation. In case you have not realised, Zimbabwe has the highest hyperinflation in the world right now! If you address the causes of hyperinflation, this problem disappears.
PS: Ask me rather how to address the hyperinflation, and I would be happy to have an honest conversation on it. But then again, we all know how that is done, right?