Using Technology To Revolutionize The Insurance Industry

Terence Zimwara

 

A surreal story of three Zimbabwe men who stole a corpse and burnt it to make it look like a road traffic accident made headlines.

The men hatched a plan to defraud a life assurer in one of the most daring and sensational stories of insurance fraud.

The trio was eventually caught but not before the life assurer had already paid the fraudulent claim of $70 000!

In another high profile case, a past winner of a television reality show got arrested for alleged insurance fraud involving a vehicle.

 

Insurance fraud pervasive

The two cases are just a microcosm of what happens in the insurance industry all the time. And contrary to popular misconceptions, insurance fraud hurts both insurers and the consumers of insurance.

Insurance companies pay excessive or fraudulent claims which hurt the profitability of the business while clients have to contend with paying higher monthly premiums.

The scourge of insurance fraud is pervasive as it also affects medical insurance companies. They too lament the deep impact fraudulent claims are having on their operations.

For instance, local media reports state that in 2018 alone, a total of $160 million, which had been paid out by medical insurers in the previous year, might have been based on fraudulent claims.

Now for a country with medical insurance penetration of just 10%, such a figure is disproportionately high. It is therefore hardly surprising when medical insurers close shop or decide to trim staff.

Fixed overheads are constantly overwhelming revenues which face another challenge in the form of inflation.

Meanwhile, at the other end of the pendulum are incessant complains of poor service and customer relations by insurance companies.

Clients gripe about the slow pace of claims processing and the subsequent delays in the release of funds.

 

The real cost of medical insurance fraud

The reality for many medical insurance clients is that these inconveniences could be the difference between life and death.

Zimbabwean medical practitioners—who are too eager to shield themselves from inflation—now insist on a ‘top-up’ payments before treating a patient.

Doctors complain that insurance companies often take their time before releasing funds to them. This leaves medical practitioners with no option but to force patients to make extra payments over and above their normal contributions.

It is sad when patients with life-threatening ailments are sometimes forced to personally sort out payment arrangements before being treated.

It is a combination of these factors that make the business of insuring seemingly an unpleasant one. It is even more unpleasant for the insured.

Attempts to resolve some of these challenges have been made in the past. However, these have fallen short leaving clients’ dissatisfied and uninterested in insurance.

This may partly be the reason the country reportedly has low insurance penetration rates and why insurance companies constantly face viability challenges.

 

Using Technology To Revolutionize The Insurance Industry
Using Technology To Revolutionize The Insurance Industry

 

How technology wins this fight

Nevertheless, with the emergence of blockchain technology and digital identities, there are hopes that some of these challenges can be resolved.

Some decentralized blockchain networks come embedded with functionalities that not only pre-empt fraud but eliminate the duplication of duties.

The Algorand and Ethereum blockchain are some of such technologies embedded with this functionality. For instance, Algorand’s smart contracts on Layer-1 automatically enforce custom rules and logic, typically around how assets can be transferred.

This functionality enables exciting and innovative new ways to address existing inefficient and complex financial transactions. With trustless execution on the Algorand blockchain, cost and risk are lowered while allowing for instant settlement of these contracts.

Progressive insurers are embracing this technology because it reduces or eliminates the customary form filling, the back and forth visits between key offices.

Perhaps more importantly, the technology enables prompt payments once certain conditions are met. For long-suffering clients, this is a real draw.

When a contract is written in computer code, as opposed to traditional legal language, it is deemed a smart contract. This programmed contract is set up to execute and carry itself out automatically under specified conditions.

When a smart contract is on the blockchain, both parties can check its programming before agreeing to it, and then let it do its thing, confident that it cannot be tampered with or changed.

A smart card lets two parties agree to complex terms without needing to trust each other and without needing to involve any third parties.

Now in order to enhance the effectiveness of the blockchain technology, it may be necessary to employ another technology that acts as a gatekeeper at data entry points.

Known as digital identifiers (DIDs) this technology enables the creation of unique digital identities. Digital identities are the internet equivalent of the real identity of a person or entity.

Such digital identities can be used for identification in connections or transactions from PCs, cell phones or other personal devices.

A combination of the two technologies ensures that only bona fide clients of an insurance company will access its services.

There is no room for impersonation—a common practice in the medical insurance field—because clients’ digitally issued verifiable credentials (VC) cannot be replicated or tempered especially when stored on a decentralized blockchain. Therefore is no duplication whatsoever!

 

Time for innovation is now

Once an insurer has built up this infrastructure it becomes easy to quickly identify and stop common fraudulent practices.

With this in place, an insurer has no excuses for failing clients while the insured customer is pre-empted from defrauding the former.

Moreover, with trustless execution on the blockchain, costs and risks are lowered while allowing for instant settlement of these contracts.

At the moment there is a great deal of ignorance of the potential of blockchain as far as the insurance industry is concerned.

Blockchain enthusiasts are confident, however, that once all stakeholders come around the idea of using the blockchain, both insurers and the insured will see more benefits of technology.

New and innovative financial products such as escrow accounts, regulated disbursements and fee execution will become possible.

From the perspective of regulators, the technologies have the potential of improving insurance penetration rates. Higher penetration rates ultimately make the country an attractive destination for foreign direct investment.

Innovation always wins. Therefore it is better for the insurance industry to join the winning team.

 

Terence Zimwara is an Ambassador with Algorand Foundation, a technology company behind the world’s first scalable and decentralized blockchain that is based on pure proof of stake consensus. The Foundation is offering funding across application development, tools & infrastructure, research, and education & community. You can contact Terence on Whatsapp 263 771 799 901 or tem2ra@gmail.com


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    Good News As Price Of Bread Falls In Zimbabwe…Price Now Linked To Forex Auctions

    Bread price hikes

    Price Of Bread Falls In Zimbabwe

    Price Of Bread Falls In Zimbabwe

    Weary Zimbabweans citizens will be happy to learn of the fall of the price of bread, following weeks in which

    Following weeks of constant price increases weary Zimbabweans will be happy to receive a little dose of good news as the price of bread falls. A standard loaf will now be retailing for Z$66 down from Z$79. In some shops, bread was actually selling for more than $80 per loaf with some going as high as ZWL$87.

    The fall in the price of bread was announced by the Grain Millers Association of Zimbabwe (GMAZ) who revealed that the price of bread will now be tied to the official foreign currency rate as determined by the weekly foreign currency auction.

    iHarare is publishing the full statement from the Grain Millers Association of Zimbabwe announcing the fall in the price of bread,

    PRESS STATEMENT ON THE FALL OF BREAD PRICES

    1. In May 2020, Grain Marketing Board advised millers that they had run out of wheat and millers had to import on their own to meet market requirements. This led millers to resume imports using free funds. Regrettably, the price of bread flour could not be stabilised as before as it was now susceptible to vagaries of moving rate. Consequently, In the past 8 weeks, bread prices moved from ZWD18 per standard loaf of bread to the current price of ZWD79.00 per standard loaf of bread largely on account of flour. Equally affected was also the rest of confectionery and biscuit products.

    2. Admittedly, the price of bread, a necessity in all households, had become expensive and indeed worsened the cost of living. Following the re-establishment of the Foreign Currency Auction System by Reserve Bank, GMAZ has had fruitful discussions with the RBZ Governor, Dr Mangudya, whereupon foreign currency allocations to millers are now being made.

    3. Asa result, on behalf of wheat millers, I am pleased to advise that the cost of bread flour, with effect from 3July 2020, has been reduced from ZWD3,150/50kg to ZWD2,136.89.

    4. Consequently, the bakers have committed to reduce the price of a standard loaf of bread from Wholesale Price of ZWD70.00 and Retail Price of ZWD79.00 to Wholesale Price of ZWD59.00 and Retail Price of ZWD66.00. From now on, our prices will be guided by the Foreign Currency Auction outcomes.

    5. Further, GMAZ private wheat imports are continuing and we are endeavouring to ensure national adequate supplies between now and December 31,2020.

    T.Musarara CHAIRMAN

     Price Of Bread Falls In Zimbabwe
    Price Of Bread Falls In Zimbabwe

     


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    Outrage As Govt Gives Wicknell Chivayo Greenlight To Finish Gwanda Solar Project

    Wicknell Chivayo- IHarare

    Outrage Over Govt Decision On Gwanda Solar Project

    In a shocking development, Cabinet on Tuesday approved the revised implementation plan for the 100 megawatts (MW) Gwanda solar project by  Intratrek Zimbabwe.  Intratrek Zimbabwe is a company owned by Wicknell Chivayo.

    Gwanda solar project

    Under the revised implementation plan, Intratrek Zimbabwe pledges to deliver the first 10MW within six months.

    The project will be done in two phases, 10MW first and then 90MW by 2022.

    The Gwanda solar project has been the subject of court battles after Intratrek Zimbabwe failed to deliver within agreed timelines. The contract was signed in 2015,

    Energy and Power Development Minister Advocate Fortune Chasi confirmed to The Herald that Cabinet had approved the project to go ahead even though Zesa and Intratrek Zimbabwe are still negotiating to ensure compliance with an earlier High Court order.

    Chasi said,

    The parties are currently talking; they are negotiating to ensure compliance with an earlier High Court order on a standing contractual dispute. But yes, Cabinet gave approval for the project to go ahead after consideration of the circumstances and facts on the ground.

    Chasi also confirmed in an interview with The Herald that, Cabinet’s approval of the new implementation plan is tied to a new contract, the involvement of renowned power project experts, and a US$14 million loan funding commitment for delivery of the first 10MW under the new phased project plan.

    There were reports that Wicknell Chivayo’s contract with the Zimbabwe Power Company (ZPC), to establish the US$200 million Gwanda Solar Power Plant, had elapsed.

    However, a High Court ruling said the EPC 100MW Gwanda Solar Power Station, EPC contract number ZPC304/2015 & addendum number 1 for US$172 848 597,60 between ZPC and Intratrek/ Chint Electric Co-signed on October 23, 2015 is still valid, extant and enforceable at law.

    The news that Chivayo was given a second chance by Government was met with outrage on Twitter. Below are some of the responses:

     

    All we will see in 6 months, is pictures of that fat parasite, Chivayo, on an emirates flight, with gold jewelry from Aurex in a case… Mbava

    — wiley e coyote (@gedesbass) June 30, 2020

     

     

     

     


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    Here Is Why Fuel Is Now Cheaper…Zimbabwe Fuel Prices Effective 01 July 2020

    Service stations not licensed to sell in forex- iHarare

    Zimbabwe Fuel Prices Effective 01 July 2020

    Zimbabwe Fuel Prices Effective 01 July 2020
    Motorists queue to buy petrol in Harare, Zimbabwe, October 8, 2018. REUTERS/Philimon Bulawayo. Zimbabwe Fuel Prices Effective 01 July 2020

     

    The Zimbabwe Energy Regulatory Authority (ZERA) has announced that fuel prices will not be going up this week, despite the change in the official exchange rate. Tuesday’s foreign exchange auction system saw the Zimbabwe Dollar falling from ZWL$57.36 for every United States Dollar to ZWL$63.74 for every United States Dollar.

    Fuel prices remain at ZWL$ 71.62 or USD1.28 per litre of blended petrol and ZLW62. 77 or USD1.09 per litre of diesel. This effectively means that while the USD denominated prices have not changed, the fuel prices which are denominated in local currency have gone down.

    Using the official foreign currency exchange rates, a litre of petrol which used to cost an equivalent of US$1.25 is now selling for an equivalent of US$1.12 if someone uses the local Zimbabwe Dollar. Similarly, a litre of diesel which used to go for an equivalent of US$1.09 is now going for US$0.98 (98 US cents) if someone uses the local currency.

    Zimbabwe Fuel Prices Effective 01 July 2020
    Zimbabwe Fuel Prices Effective 01 July 2020

     

    Last week there was great outrage on social media platforms when ZERA announced new fuel prices following the inaugural foreign currency exchange auction system. Most Zimbabweans were furious that ethanol was the most expensive component of blended petrol and called on the government to stop blending the petrol.

    Most were also not happy that fuel prices which are denominated in United States Dollars had also gone up yet globally fuel prices have been relatively stable. In some cases, the prices have actually been going down. In response, the regulator released break downs to show how the cost of fuel is arrived at. However, the regulator failed to mention why the country is still blending petrol with ethanol, if ethanol is now the most expensive component.

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    Zimbabwe Official Exchange Rate Jumps To Z$63.7 Following Forex Auction

    RBZ Now Says ALL FUEL Can Be Sold In United States Dollars

    Zimbabwe Official Exchange Rate Jumps To Z$63.7 

    Zimbabwe Official Exchange Rate Jumps To Z$63.7

     

    The official foreign exchange rate for the United States Dollar (USD) to the Zimbabwe Dollar has now moved to US$1: ZWL$63.74. This comes after the country held the second edition of the Reserve Bank of Zimbabwe’s forex auction system. The inaugural edition of the forex auction system was held last week and saw the official exchange rate move from ZWL$25 for every USD to ZWL$57.36 for every dollar.

    The weighted average of ZWL$63.74 for every US dollar, will be the official exchange rate until the next auction next week Tuesday. US$16.32 million dollars was allocated to buyers with the highest bid coming in at ZWL$92 while the lowest bid came in at ZWL$37.82.

    Compared to last week, there was a huge improvement of 57 per cent in the total amount allocated. Last week, US$10.34 million was traded on Tuesday. There was also an improvement in the lowest bid offered, with this week’s   ZWL$37.82 comparing favourably against last week’s ZWL$25.5.  However, there was a decrease in the highest bid which came at ZWL$92, 8 per cent lower than last week’s highest bid of ZWL$100.

    A total of $18,95 million bids was received and $16,32 million was successfully allotted. 86 per cent of the bids managed to get the foreign currency they needed. Raw materials came through with the highest allotment at $7,2 million.

    This means that the government will also be increasing the fuel price tonight.  Last week, the Zimbabwe Energy Regulatory Authority (ZERA) announced that the price of fuel will be adjusted on a weekly basis, as the authorities track the exchange rate. Price increases are also likely to follow.

     

    Zimbabwe Official Exchange Rate Jumps To Z$63.7
    Zimbabwe Official Exchange Rate Jumps To Z$63.7

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    EcoCash Suspends Agent, Bulk Payer Lines In Compliance With RBZ Directives On Mobile Money Services

    EcoCash Suspends Agent, Bulk Payer Lines

    EcoCash Suspends Agent, Bulk Payer Lines
    EcoCash Suspends Agent, Bulk Payer Lines

     

    The country’s biggest mobile money company EcoCash has suspended all agent and bulk payer lines in compliance with the directive issued by the Reserve Bank of Zimbabwe (RBZ). This comes after the central bank toned down on the move made by the government on Friday night to ban mobile money services accusing them of creating money and blaming them for the collapse of the local Zimbabwe Dollar.

    Below are the latest communications from Ecocash.

    NOTICE TO AGENTS, BULK PAYERS AND MERCHANTS

    Dear Agents, Bulk Payers and Merchants,

    Please be advised that we nave received a directive from the Reserve Bank of Zimbabwe which states the following:

    Please be advised that we have received a directive from the Reserve Bank of Zimbabwe which states the following:

    1. All Agent and Bulk Payer lines have been suspended until further notice with immediate effect

    2. Merchant to Merchant and Merchant to Individual transactions have also been suspended until further notice.

    Pay Merchant transactions continue to operate normally.

    Please be also advised that all other EcoCash services continue to operate normally.

     

    EcoCash Suspends Agent, Bulk Payer Lines
    EcoCash Suspends Agent, Bulk Payer Lines

    Dear Valued Customers,

    Following communication from the Reserve Bank of Zimbabwe, please be advised that with immediate effect the following changes apply:

    • All Agent and Bulk Payer lines are suspended This therefore means that Cash in and Cash out services have been suspended until further notice.

    However, please be advised that all other EcoCash services continue and are operating normally.

    We would like to thank you our customers for all your continued support.

    EcoCash Suspends Agent, Bulk Payer Lines
    EcoCash Suspends Agent, Bulk Payer Lines

     


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    RBZ Finally Clarifies On Mobile Money Ban, Says “Bonafide Transactions Will Be Processed Normally”

    RBZ Speaks On Devaluing Zimbabwe Dollar

    RBZ Clarifies On Mobile Money Ban

    RBZ Clarifies On Mobile Money Ban

     

    Barely 24 hours after the government announced that it was banning EcoCash and all mobile money services, the Reserve Bank of Zimbabwe has finally clarified on the issue.

    The monetary authorities released a statement which has a more sensible position whereby mobile money serves will be allowed to continue operating although with restrictions on some services. According to the statement which was released by RBZ governor John Panonetsa Mangudya, all ‘bonafide transactions will be processed normally”.

    However, all mobile money agents are suspended from facilitating mobile financial transactions with immediate effect and all merchant transactions are suspended except for receiving payments and paying utilities which is now limited to ZW$5000 per day.

    Below is the statement from the RBZ which iHarare is publishing in its entirety.

    Following the Government Press Release on the Suspension of Monetary Transactions on Mobile Based Money Platforms (One Money, MyCash, Ecocash and Telecash) dated 26 June 2020, the Reserve Bank of Zimbabwe (the Bank) wishes to advise the public as follows:

    a) All mobile money agents are suspended from facilitating mobile financial transactions with immediate effect.

    b) All merchant transactions are suspended except for receiving payments for goods and services as well as payment of utilities (water, power and airtime), which have been limited up to ZW$5000 per day for the
    convenience of the transacting public.

    c) All mobile money liquidations should be done through the banking system.

    d) All bulk payer transactions have been suspended with immediate effect.

    These unprecedented measures have been necessitated by the need to protect consumers on mobile money platforms which have been abused by unscrupulous and nonpartisan individuals and entities to create instability and inefficiencies in the economy.

    Members of the public are assured that their bonafide transactions will be processed normally.

    John P. Mangudya

    Governor

    27 June 2020

     

     

    RBZ Clarifies On Mobile Money Ban
    RBZ Clarifies On Mobile Money Ban

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    OneMoney Still Operating Normally: NetOne Responds To Govt Ban On Mobile Money

    NetOne responds to Govt ban- IHarare
    NetOne responds to Govt ban
    OneMoney responds to Govt ban
    OneMoney

    NetOne responds to Govt ban and says its mobile money platform OneMoney is functioning normally.

    In an interesting turn of events, Government owned mobile operator NetOne has disregarded a ban on all mobile money transfers on Friday evening.

    The directive was announced by Secretary for Information, Publicity and Broadcasting Services Nick Mangwana.

    In a statement on their Twitter page, NetOne said OneMoney services are still operating normally.

    iHarare publishes OneMoney’s full statement below:

    Dear Valued Customer,

    We would like to advise that OneMoney services are still operating normally.

    Do not hesitate to contact us on the numbers provided below, for any queries and enquiries.
    OneMoney, it’s One time.

    Toll Free 121

    WhatsApp helpline 0712 980 198

     

    Econet has also responded to the Government ban and urged its customers to remain calm. EcoCash also said it would expect such a directive from the Reserve Bank of Zimbabwe (RBZ) and not Government.

    In the statement, Government accused mobile money platforms of fifteen (15) activities which include;  illegal externalization of foreign currency through transfer mispricing; acting as banks outside the purpose for which they were originally licensed, as non-banking financial institutions. This includes, in the particular case of Ecocash, holding well in excess of ZWL$8 billion distributed across just over 501 000 agent/merchant lines as lat 10 June 2020, which is not under the scrutiny of the Financial Intelligence Unit; fraudulently creating and issuing non-attributable and non-auditable agent cellphone lines/accounts and facilitating illicit trade in notes and coins, at contrived rates of between 30% and 50%, thus causing artificial shortages of the same within the banking system.

    In May this year the Reserve Bank of Zimbabwe (RBZ) directed EcoCash and other mobile money providers to suspend mobile money agents. The agents were specified by the Financial Intelligence Unit of the central bank.

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    Govt Tightens Regulations For EcoCash, Mobile Money Service Providers

    Govt Tightens Regulations For EcoCash, Mobile Money Service Providers
    Govt tightens regulations for EcoCash, money service providers.

    SI

    In an unexpected turn of events, Government has made a u-turn on mobile money transfer ban after publishing SI 80 of 2020.

    Government through the Ministry of Finance and Economic Development has published Statutory Instrument (SI) 80 of 2020 Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations.

    SI 80 of 2020 seeks to regulate mobile money banking and transfers. The SI signifies a reversal by Government which had banned mobile money transactions on Friday evening.

    Under SI 80 of 2020 mobile money providers are deemed to be financial institutions in terms of the Banking Act. They will be required to pay an application fee of $5 000 ZWL and an annual subscription fee of $300 000 ZWL.

    Government has tightened regulations on mobile banking and transactions. Under the new regulations, mobile money platforms can no longer set transaction charges without the consent of the Reserve Bank of Zimbabwe (RBZ).

    Under subsection 5, SI 80 of 2020 reads:

    5. (1) No money transmission provider or mobile banking provider shall levy, amend or review any transaction charges without the prior approval of the Reserve Bank.

    (2) If it comes to the notice of the Reserve Bank that default is made in complying with subsection (1) the Reserve Bank may serve a category 2 civil penalty order upon the defaulting mobile money provider.

    Mobile money providers also face 6 months in prison or a fine if found guilty of contravening the provisions of section 4 of SI 80 of 2020. Section 4 of SI 80 of 2020 mandates mobile money services to be connected to the national payment switch, open and maintain a bank account that is designated exclusively for mobile banking services, ensure that no money is transmitted or is retained on the payment system without a corresponding correct bank balance and must submit periodic returns to the Reserve Bank among many other directives.

    Part of SI 80 of 2020 reads:

    (12) Where a mobile money provider contravenes the provisions this section the Reserve Bank may in addition to issuing a civil penalty order in terms of subsection (11) , withdraw the recognition of a payment system in terms of section 6 of the National Payment Systems Act [Chapter 24: 23].

    (13) Any person who contravenes this section shall be guilty of an offence and be liable to a
    fine not exceeding level 7 or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.

    You can download SI 80 of 2020 here.

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    Seven Arrested For Rejecting Bond Notes

    Seven arrested for rejecting bond notes- iHarare
    Seven arrested for rejecting bond notes
    Police arrest seven for rejecting bond notes- iHarare
    Paul Nyathi

    In an interesting development, police arrested seven traders for rejecting bond notes.

    Police have followed up their words with action following a statement earlier this week threatening to deal with traders rejecting bond notes. Traders have been rejecting notes inscribed ‘bond notes’ in preference for those inscribed ‘dollars’.

    Some traders are listing their prices in United States dollars following a Government directive that the currency was now legal tender during the COVID-19 lockdown. Traders prefer the US dollar because it is more stable than the local currency whose value is eroded by inflation.

    The Herald reports police arrested seven traders in Harare and they were expected to appear in court soon.

    In a statement published by The Herald, national police spokesperson Assistant Commissioner Paul Nyathi urged members of the public to report any person, trader, or institution rejecting bond notes.

    Nyathi said:

    The ZRP will ensure that all laws meant to protect the public and promote the effective maintenance of law and order in the country are enforced without fear or favour.

    Earlier in the week, The Grain Millers Association of Zimbabwe (GMAZ) this week also threatened to stop supplying their products to wholesalers and shops refusing bond notes and coins.

    Members of the association produce and pack maize-meal, self-raising flour, salt, rice, sugar beans, and soya chunks.

    Government and the Reserve Bank of Zimbabwe (RBZ) have also released statements saying traders are legally bound to accept bond notes as they are still legal tender.

    The government said it will gradually replace bond notes with notes inscribed dollars.

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