New rules threaten Cassava unit


Government is on the verge of concluding a new framework centralising the country’s mobile money platforms, a move which will reduce Cassava Smartech’s unit, EcoCash, dominance in the sector, Business Times heard this week.

The framework will result in a centralised switch, owned by government and used by players for a fee, insiders said this week. EcoCash accounted for 6.7m (94.4%) of the 7.1m active mobile money subscribers as of September 2019 and dovetails to debate for number portability, coming as the government is working on a new convergence framework to be known as Converged Licensing Regulations.

The regulations were supposed to come on board last year.

The new instrument speaks to licensing of new operators and new categories including mobile virtual network operators with a view to removing bottlenecks and deal with confusion in instances operators need clearance from different regulators.

In November, Cecelia Nyamutsa, legal director at the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), said the instrument together with the new Postal and Telecommunication Bill were sitting with the Attorney General’s office.

The new mobile money regulations, insiders say, facilitates interoperability among mobile money actors in the strictest sense with, for instance, subscribers able to send money from Telecel’s Telecash to NetOne’s One Money and Econet’s EcoCash seamlessly.

Under the new structure, players pay a fee for using the switch and users can easily make transfers across networks.

The new system is much like the Real Time Gross Settlement (RTGS) function, housed under the central bank and accessible to all banks.

“Can you imagine if one bank owned the RTGS platform or if ZimSwitch was opened by one bank, what would happen to the other? It would be chaos and we are saying government slept on the job, but it’s not too late to make it better for consumers,” said a banker who requested not to be named, adding over-reliance on EcoCash alone posed a huge systemic risk for the country.

Banks have been opposed to EcoCash’s emergence from the start, only seeing it as a threat to their operation, while missing an opportunity to influence sustainable ground rules conducive for cooperation between the mobile networks and financial institutions.

“The dialogue is there among regulators and the change is inevitable, a new regime could be in place very soon actually if all goes well,” said a source close to the developments.

The source requested not to be named, referring all questions to Potraz director general Gift Machengete. Machengete could not be drawn to comment on the subject.

He, however, confirmed a new converged the supervision regime is expected to be in place soon.

“We have done the regulations and given to the powers that be and I think maybe they are just about to be finalised,” Machengete said.

Currently, EcoCash has 6.7m subscribers and enjoys and it is for this reason that some subscribers continue holding on to Econet mobile phone line lines especially given that they can’t transact across networks at the moment.

Riding on the EcoCash backbone, Econet introduced Ecocash Bureau De Change, Zimbabwe’s first mobile bureau de change that provides a platform for one to sell foreign currency and verify bid exchange rates from the comfort of one’s phone.

In its last financial year, for the period to February 2019, Econet reported it had 11.4m subscribers.

Econet said the telecommunications segment remains the anchor of the group’s performance, contributing over 59% of total revenue. Econet said traditional revenue streams of voice and SMS have continued to grow as demand for these services remains buoyant.


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