Econet drags RBZ to court over cash-in, Cash-out ban

Spread This News

By Mary Taruvinga

Cassava Smarttech Zimbabwe Limited, which operates Ecocash money transfer, has rushed to the High Court with an urgent chamber application seeking to nullify Reserve Bank of Zimbabwe (RBZ) directive to ban cash in and cash out transaction immediately.

Through its lawyers, Nyambirai and Mtetwa Legal practitioners, Cassava said the move will drive majority of Zimbabweans into extreme poverty and highly inconvenience millions of subscribers.

The lawyers also submitted that they will cost their client business.

Seeking temporary interdict to the shutdown, the lawyers also said what the central bank did was unlawful.

“The directive by the defendant to shut down the Ecocash cash-in and cash-out facilities is ultra vires Section 10 of the National Payments Systems Act (Chapter 24:23) under which it purports to have been made.

“Ecocash and its facilities is duly recognised by the RBZ in accordance with the National Payments Systems Act. That recognition gives applicant and its clients a right to use these facilities.

“Section 10 only authorises RBZ to act in the event that the system has itself done or omitted to do something. The applicant is not punishable where some users are alleged to have committed abuse. The approach in that case is to penalise the defaulting users.

The lawyers said there is no wrongdoing by the Ecocash system or its management board.

“In any event, it would be irrational to take away the applicant and its users rights because a few users are abusing the Ecocash platform. Cash-in and cash-out constitutes the rights in property that the applicant and the users cannot be compulsorily deprived of other than in compliance of section 71 of the Constitution.

Cash-in and Cash-out facilities were halted Monday afternoon following a huge outcry from the public who accused Ecocash agents of daylight robbery, through charging up to 60 percent per transaction.

But the lawyers defended the facility saying it has always been discriminated.

“The respondent has not banned RTGS cash withdrawals and deposits. Cash-in and cash-out facilities are core to the Ecocash system, the whole Ecocash system had to be pulled down first in order to pull these facilities,” the company argues.

According to court papers, Ecocash handles seven million transactions per day.

The lawyers also said approximately two million people will carry out transactions dealing with lifesaving situations.

“Pulling down Ecocash means loss of life, opportunities and financial loss running into hundreds of millions and billions.

“The applicant has been cooperating with RBZ in identifying abusers of the platform. The objective of curbing abuse can be met if the respondent intensifies its investigation with the cooperation of the applicant within the bounds of the law.”

According to the application, Ecocash has more than 10, 5 million users, that is 90 percent of the adult population in Zimbabwe.

“From September 2011 when the cash-in facility was introduced, 227 519 851 transactions worth US$10 195 546 216 plus ZW$7 542 785 610 was conducted. On the other hand, cash out transaction worth US$8 657 704 182 plus ZW$4 142 862 274 were done.

“Thus, Ecocash has played a critical role in facilitating transactions in circumstances of acute agents, more than the number of banking branches.

The case is yet to be set down for hearing.