Zimbabwe Authorizes Mobile Money Agents to Boost ZiG Usage
Zimbabwe Allows Mobile Money Agents to Operate Again to Boost Usage of New Gold-Backed Currency
Mobile money agents in Zimbabwe, previously banned for allegedly contributing to the collapse of the Zimbabwean dollar, will be permitted to operate again in a bid to promote the country's new gold-backed currency, known as ZiG. This initiative is part of the government's efforts to enhance the utilization of ZiG, introduced in April to replace the Zimbabwean dollar, and to diminish the prevalence of the unofficial market. The designated agents, including those from Econet Wireless Zimbabwe and NetOne, will function as bureaux de change, enabling the public to access small amounts of foreign currency for day-to-day transactions. This decision forms part of Zimbabwe's strategy to eliminate street market traders, whom it blames for exacerbating previous currency crises.
Key Takeaways
- Zimbabwe is allowing mobile money agents, including Econet Wireless, to operate once again in order to bolster the usage of its new gold-backed currency, ZiG.
- This measure is aimed at increasing the utilization of ZiG, curbing the informal market, and providing a bureau de change service for the public.
- Mobile agents had been prohibited in 2020 due to allegations of charging premiums and contributing to the downfall of the Zimbabwean dollar.
- ZiG, rolled out on April 5, marks Zimbabwe's sixth attempt at establishing a stable local currency in 15 years, replacing the Zimbabwean dollar.
- The government has arrested at least 100 street traders as part of its campaign to eradicate informal market activities.
Analysis
The reintroduction of mobile money agents, such as Econet Wireless and NetOne, is anticipated to drive the adoption of Zimbabwe's new gold-backed currency, ZiG. This decision is intended to augment the acceptance of ZiG, diminish the informal market, and provide bureau de change services to the public. However, the agents were previously banned in 2020 following allegations of imposing additional charges and contributing to the collapse of the Zimbabwean dollar. ZiG, which was introduced in April, is the sixth currency attempt in 15 years, replacing the Zimbabwean dollar. Positively, the move may lead to potential market stabilization and enhanced trust in the new currency, while there may also be lingering mistrust due to past currency crises. Street market traders, already facing arrests, are likely to encounter further challenges as the government intensifies its efforts to eradicate informal trade.
Did You Know?
- Mobile money agents in Zimbabwe: These are intermediaries who facilitate financial transactions using mobile phones, allowing users to conduct various financial services such as deposits, withdrawals, and money transfers. They were banned in 2020 due to allegations of contributing to the collapse of the Zimbabwean dollar by charging additional fees and perpetuating the informal market.
- ZiG (Zimbabwe's new gold-backed currency): ZiG is Zimbabwe's latest endeavor to establish a stable local currency and was introduced on April 5, 2024. It is backed by gold reserves and aims to restore confidence in the nation's currency following several unsuccessful attempts over the past 15 years. The ZiG replaces the Zimbabwean dollar in an effort to stabilize the economy and reduce reliance on the informal market.
- Bureau de change: This is a business that facilitates the conversion of one currency to another. In the context of this news, the mobile money agents, including Econet Wireless Zimbabwe and NetOne, will function as bureaux de change, allowing the public to access small amounts of foreign currency for everyday use, thereby promoting the adoption of the ZiG and reducing dependence on informal market traders.