The Prospects and Challenges for Mobile Money Regulation and the Promotion of Financial Inclusion in Zimbabwe

Abstract

Zimbabwe experienced a financial crisis from around 2005 to date which was characterised by hyperinflation, currency instability and a collapse of the formal financial sector. This situation has impoverished many and led to the categorisation of many people in Zimbabwe as poor, informally employed and low-income earning. Additionally, as result of this financial crisis, mobile money services like Ecocash, Telecash, Mycash and Onemoney were established. These mobile money services have substantially promoted the financial inclusion of most people in Zimbabwe to date. Mobile money services have come in handy for most informal workers who account for approximately 85% of the workers in Zimbabwe who do not have formal bank accounts. About 90% of the adult Zimbabwean population uses Ecocash for mobile money transfers and for urban to rural money remittances for family support, payment for goods and services in retail settings. Apart from Ecocash, which has various savings, investments and loan provision services, it is evident that other mobile money services in Zimbabwe like Telecash, Mycash and Onemoney do not promote savings as conventional banking institutions would. Additionally, there has been rampant misuse of mobile money services in Zimbabwe including practices of money laundering. This status quo appears to result from the lack of a legislative framework for mobile money services in Zimbabwe. To date, the Reserve Bank of Zimbabwe (RBZ) and Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) are responsible for the supervision of mobile money operations in Zimbabwe and their regulation through the Statutory Instrument Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations. To this end, this research will investigate the challenges surrounding mobile money services in Zimbabwe in a bid to promote financial inclusion in Zimbabwe.