FULL THREAD: Effects Of Ban On Mobile Money, Lowering Zipit Limits

ZimBollar Research Institute, an independent source of economic and financial research data in Zimbabwe has said the ban of mobile money and lowering of daily and monthly Zipit limits is a repeat of what the government did in 2008.
The institute added that the move shall be, as in 2008, have dire consequences. We present the institute’s analysis of the matter below.
Ban on Mobile Money+ Zipit (The Effects)
Whilst the ZWL has exhibited volatility and turbulence, it is important to highlight that economic agents accepted it as a currency albeit at a huge premium as demonstrated by the runaway alternative market exchange rate.
With Mobile Money and Zipit Limits, two scenarios are likely to emerge: a) Increased ZWL Cash notes demand OR b) A near 100% dollarised economy as retailers prefer to receive the forex directly than to get electronic ZWL which has limited use due to the limits
In scenario a) above the increased demand for ZWL Cash Notes will impact the already existing premium on cash notes, whilst b) Implies an accelerated depreciation of the ZWL as it becomes less and less preferable. Both incidences imply an increase in the rate!
Most worrying is the fact that Gvt revenues will be adversely impacted with this ban. The 2% IMMT Tax revenues were largely on account of transactions on Mobile Money and Zipit platforms. With Gvt expenditure growing, options to fund the budget become limited.
Zipit/Mobile Money according to December 2019 stats pushed 23% of total values on the national payment system at $8,72b. This is the segment that services the individuals and SME segments of the economy and the ban will affect the most vulnerable in society.
VERDICT/OUTLOOK Enhanced use of the United States Dollar for domestic transactions coupled with a massive devaluation of the ZWL on account of its limited options due to the new limits.
Today in history 2 October 2008, the Central Bank suspended the RTGS platform on account of alleged abuse of the platform by foreign currency traders! 2 months later the ZimDollar was extinct!

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