HARARE – A directive by the Reserve Bank of Zimbabwe (RBZ) to freeze over 54,000 EcoCash agent lines is “illegal and irrational”, the Econet Wireless unit argues in court papers.

The RBZ said it was investigating suspected money laundering activities which are driving the parallel forex market and applying pressure on the weak local currency, but EcoCash says the process is an untargeted “dragnet” which has inconvenienced millions.

EcoCash, with 11 million subscribers, mounted an urgent court application on Thursday to have the May 4 RBZ directive quashed.

“On May 4, 2020, the respondent (RBZ) issued a directive to the applicant whose effect is that the applicant must suspend and freeze EcoCash accounts of agents whose transactional value exceeds Z$100,000 per month,” EcoCash lawyer Ntokozo Siziba says in the court application.

“The respondent placed a condition that those agents who wanted to continue with the business of transacting must reapply and application will be subject to confirmation by the respondent.

“The provisions of legal sections that the RBZ placed reliance on do not give respondent power to suspend agent lines from participating in the agent system. No crime has been committed by agent line holders, and considered together with all relevant facts the directive is illegal and irrational.”

EcoCash says the RBZ directive exempted banks, bureaux de change, listed companies, international organisations and government agencies, but has affected large companies including Transverve, Zuva, Total, N Richards, Metropeech and Engen.

EcoCash says the disruption has extended to its entire customer base.

Said Siziba: “EcoCash has 11 million customers in a country where less than half the population have bank accounts. The directive severely prejudices a majority of the population, EcoCash and its affected agents.

“To the extent that the directive is a dragnet that penalises the innocent agents and their customers in the hope of catching some unknown and unspecified offenders who have committed some unspecified crimes, it is irrational.”

EcoCash said it had taken nine years to build its network and bristled at RBZ arguments that it had been found wanting in enhancing its “know your customer” principles.

EcoCash – which handles over 95 percent of all mobile money transactions – secured approval on March 19 to increase transaction limits, but it says the RBZ issued a new directive on April 21 to reduce limits before the May 4 directive.

Eddie Chibi, CEO of EcoCash’s holding company, Cassava Smartech, said in an affidavit that the penalisation of over 54,000 agents merely because they handled transactions of over Z$100,000 was irrational.

The amount, he said, had been “eroded by inflation that no rational administrative body would consider it a reasonable amount given the fact that it is lower than the maximum amount that was in place during the multi-currency” regime that was in place between 2009 and 2019.

“In this respect, I request that the court, from its own experience, take judicial notice of the fact of hyper-inflation which has resulted in an exponential rise in the cost of living,” Chibi said.

The firm also argued that the directive is grossly unfair as it has taken them nine years to build the agent network, and highlighted that the process is very expensive.

EcoCash says the demand by the RBZ that all affected agents should re-register will be almost impossible to complete within a reasonable space of time to enable them to resume operations, particularly given the Covid-19 pandemic which has restricted travel and forced companies to close.

“It therefore means that the only remedy available to ensure that the affected agents can discharge their obligations to the customers is to have this matter dealt with by this Honourable Court on an urgent basis,” said EcoCash.