A comparative statutory analysis of the use and regulation of mobile money to promote financial inclusion for the poor in Zimbabwe

Abstract

Mobile money refers to financial services delivered through the mobile phones and/or related electronic devices without the need for bank accounts. Mobile money combines finance and technology and/or telecommunication aspects. Additionally, mobile money is an innovative financial product that is contributing to the financial inclusion of many poor persons especially in developing countries such as Zimbabwe. This thesis reveals that millions of poor persons who could not access formal financial services owing to various reasons such as failure to meet banks' documentary requirements, use mobile money in Zimbabwe and other countries. Mobile money has assisted many poor persons to access financial services since the outbreak of the coronavirus disease (COVID-19 pandemic). Public health experts encouraged people across the world to use contactless payment systems in order to combat the spread of the infectious coronavirus through cash. In this regard, mobile money allows people to transact using their mobile phones and this provides a measure of safety and convenience to users, especially the poor. However, the use of mobile money requires robust regulation in order to combat financial crimes such fraud, money laundering and terrorist financing. Although mobile money started in 2011 in Zimbabwe, the legislature has not enacted a statute that expressly regulates mobile money. Financial regulators and law enforcement authorities use incoherent provisions from various statutes to regulate mobile money. In this regard, there are various flaws in the mobile money regulatory framework. This thesis reveals that the National Payment Systems Act, as amended, does not define mobile money. Furthermore, the same Act does not make specific provisions on mobile money. The Banking Act, as amended, use the terms "mobile money" and "mobile banking" interchangeably. However, this thesis reveals that the two terms are distinct and connote different meanings hence they cannot be synonyms. The Banking Regulations 2020 mention mobile money but do not provide a definition and/or provisions that directly and robustly regulate mobile money in Zimbabwe. To this end, this thesis analysed the current mobile money framework to investigate if it is robust enough in regulating mobile money in order to promote financial inclusion for the poor in Zimbabwe. The effectiveness of a legal framework in providing regulatory provisions and enforcement mechanisms in order to achieve its purpose determined the robustness of the mobile money framework. The thesis does a comparative analysis on the regulation and use of mobile money to promote financial inclusion for the poor in other jurisdictions, namely Kenya, South Africa and the United Kingdom. Accordingly, the thesis reveals that Zimbabwe lags behind in adopting and regulating financial technology products. In this regard, the current mobile money regulatory framework is inadequate and fails to promote financial inclusion for the poor effectively in Zimbabwe. The thesis proposes a viable regulatory technology (regtech) model that policymakers and the legislature can use to enhance the regulation of mobile money in order to promote financial inclusion for the poor in Zimbabwe.