Econet Faces Shutdown in Zimbabwe
Econet, a major mobile operator, launched a mobile money service called Ecocash in 2011 as the result of the long-lasting economic crises – hyperinflation, currency instability and a collapse of the formal financial system. Consumers, mostly employed in the informal sector, had a widespread mistrust of the formal banking system. As the result of the country’s high mobile penetration the service had 2.3 million users within 18 months. Today, close to 90% of adult Zimbabweans use Ecocash. There are also other competitors such as OneMoney, Telecash and Mycash. Mobile money is popular because it allows money to be secured in high crime areas through the cash-in and cash-out functionality. This allows users to deposit cash into a mobile account through a mobile money agent and withdraw physical cash at a convenient time and place. Customers can avoid the long queues and the withdrawal limits set by the formal banking system. However, the Reserve Bank of Zimbabwe recently placed significant regulatory restrictions on operations of mobile money operators, accusing them of encouraging illegal foreign currency exchange, money laundering and fraud through the cash-in/cash-out service.
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