RBZ maintains ecocash is a Ponzi scheme

The Reserve Bank of Zimbabwe (RBZ) has branded EcoCash a Ponzi Scheme which is accelerating the black market exchange rate and devaluing the Zimbabwe Dollar. The RBZ claimed that EcoCash has agents who have a massive overdraft on their Ecocash accounts which is well in excess of ZWL$39 million.The RBZ made the allegations when it filed its notice of opposition to EcoCash’s urgent application filed at the High Court.

The RBZ is defending its decision to freeze and suspend accounts belonging to agents who trade in excess of ZWL$100 000 per month. This is approximately USD2 000 using the black market rates.This comes after EcoCash dragged the central bank to the courts alleging that the directive to suspend thousands of accounts was irrational and illegal. EcoCash wants the directive to be suspended arguing that it will cause irreparable damage to its agents as well as innocent Zimbabweans.In the notice of opposition RBZ governor, John Mangudya claimed that EcoCash was creating fictitious money which is being used to buy foreign currency and inflate the exchange rate.

“What the general public does not know is what happens in the interim. The funds that have not been credited to the vendor or the recipient are then available for trading on the Ecocash Platform in the foreign currency market. In effect, the delays allow a certain person, who was the subject matter of an investigation, to buy and sell foreign currency in the intervening period.”“How can an entity or individual have an overdraft on an electronic payment platform such as Ecocash?”

“Applicant has failed to proffer an explanation and is challenged to do so under oath.”“The applicant can only operate the payment systems in a lawful way. Operating the payment systems unlawfully through a Ponzi Scheme and shadow banking amounts to a violation of the law and does not give rise to any rights that the applicant can seek to enforce in the manner sought.”Mangudya also argued that there is no risk of any irreparable harm being done to EcoCash.“It is telling that the applicant has not been candid with this Honourable Court by setting out in detail the so-called affected agents, their identity and their KYC documentation. This is because the applicant has not been complying with the law and is unable to produce this information. Without the information, the applicant has not made out a case for an interdict.

“The Applicant, through this application shows that it is abdicating its responsibility of ensuring that its system and its identified agents operate in terms of the law. This is a blatant display of arrogance, defiance and impunity.”The matter is still pending.