Cassava approaches High Court

02 Oct, 2019 - 13:10 0 Views
Cassava approaches High Court

H-Metro

Mathew Masinge, Court Reporter

Cassava Smartech Zimbabwe, who run mobile money transfer platform EcoCash, yesterday challenged a decision by the Reserve Bank to ban its cash-In and cash-Out facility.

The group applied for a temporary interdict at the High Court citing the central bank as its respondent arguing that its users’ right has been infringed upon.

The service, which has about 51 000 agents countrywide, is believed to be benefiting mostly the rural unbanked population that do not have ready access to any bank.

According to the application, after the pioneering financial service provider was introduced in 2011, it has been of use to more than 10,5 million local users.

However, there is a bit of regret on the side of EcoCash with alleged abuses of the platform form for money laundering but the Applicant suggests they can penalize the culprits.

“The growth in EcoCash has given access to financial services to the population that was hitherto unbanked and had lost confidence in the banking system.

“The Ecocash system has 10 562 070 users of which 6 400 000 have been active in the last 90 days.

“Of the total registered users 6 337 242 are rural customers while 4 224 828 are urban customers,” reads Cassava Smartech chief executive officer, Edmore Chibi’s affidavit.

Chibi argues that EcoCash has played a critical role in fighting liquidity challenges.

“From September 2011 when the cash in facility was introduced 227 519 851 (cash in transactions) worth US$ 10 195 546 216 plus ZW$7 542 785 610 have been conducted.

“On the other hand 387 308 926 cash out transactions worth US$8 657 704 182 plus ZW$4 142 862 274 have also been conducted. Thus Ecocash has played a critical role in facilitating transaction activity between Zimbabweans in circumstances of acute liquidity challenges.

“The applicant’s (Cassava Smartech) shareholders include pension funds, meaning that most employees and retirees in Zimbabwe are beneficially interested in the equity of the Applicant,” he said.

He said the EcoCash facility does not create any money and has become a lifeblood for commercial activity.

“There is no incident of money creation as the electronic money credited to the wallet will be equivalent to the amount of cash deposited.

“This exchange of cash for electronic money has become a lifeblood of commercial activity in Zimbabwe since September 2011.

“Lately, there has been a surge in the demand for cash. People have been buying cash at a premium approximately 35 percent using their RTGS bank balances or Ecocash.

“The market information I have based on informed investigations by my team indicates that all electronic money balances are being heavily discounted in preference for cash.

“The exchange for electronic money for cash must actually be higher on the RTGS platform because the platform commands a higher market share by value than EcoCash,” he added.

Both the Cassava Smartech and the Reserve Bank have been investigating cases of money laundering.

“The Reserve Bank of Zimbabwe and the Applicant have also been investigating incidences of abuse of the EcoCash platform by users.

“Since June 2019, various accounts of agents and individuals have been frozen on allegations of money laundering or abuse of the EcoCash platform,” said Chibi.

Now, Cassava Smartech are saying that they cannot be punished for an abuse some of its users are alleged to have committed.

The company suggests that the safest approach is rather to penalize its defaulting users.

“There is no wrongdoing that is alleged to have been committed by the EcoCash system or its management board, the annexure alleges wrong doing on the part of some agents, not all of them or other innocent users of the system,” reads the application.

The matter is awaiting set down by a High Court judge.

 

 

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