MORE than ZWL$ 8.4 billion, whose source could not be established, has been circulating outside the banking sector as phantom money and was the major contributing factor to high inflation in the country which in turn led to incessant price hikes and skyrocketing exchange rates.
President Mnangagwa said the country had been bedeviled by inflation which led to unjustified price hikes due to phantom money which was being circulated through Ecocash albeit outside the banking sector.
The President, who spoke in Gweru over the weekend, said Government investigated Ecocash and established that the mobile money transfer system was being abused while there was also manipulation of technology to create artificial money.
President Mnangagwa said illegal money dealers (Osiphateleni) have been trading more than ZWL$ 86 million on a daily basis through mobile phones using money whose sources they could not explain.
“We went through hardship where prices were going up everyday. The exchange rate was flying going up everyday and we were wondering what was happening. We set up a committee to look into it and they discovered that there was up to ZWL$ 8.4 billion which was circulating outside the banking system which in financial terms is called phantom money. This means this money had no specific source. Yakangowanikwa yavepo. It (the money) does not represent anything.
You would find a young person, who does not own even a house they are tenants but surprisingly they are trading ZWL$ 86 million on a daily basis through phone transactions. These people have never worked anywhere but trading such huge some of money on their phones. This money is not reported stolen anywhere and you wonder where it came from,” he said.
President Mnangagwa said Government descended on the perpetrators and brought sanity to the financial sector. He said Ecocash was the biggest perpetrator.
“This was being done through the manipulation of technology. We discovered that Ecocash was the source of all this. We started investigating and we had the access to the server and that is where we got everything and all the information and the corrupt activities.
“Takatora zitsvimbo ndokurova (we put all that to an end). I know some of you were affected because you were using it to do other transactions. We then reduced the maximum amount that a person can send or transact to ZWL$ 5000. We discovered that there was money outside the banking sector which was driving inflation and we dealt with it. We introduced the Dutch auction system for both big businesses and SMEs,” he said. — Sunday News