Golden Sibanda Senior Business Reporter
LONDON-listed Paynet Zimbabwe’s parent firm Cambria Africa Plc, has accused banks of working in collusion and as a “cartel” to take a unified position of refusing to pay for service fees in US dollars when in fact they had different contracts and should have performed individually.
Cambria Africa chief executive officer (CEO) Samir Shasha, said yesterday that despite the banks having signed individual contracts, they decided to act collectively through their association to refuse to pay in US dollars, resulting in them being disconnected.
Paynet Zimbabwe provided an outsourced bulk payments transfer platform linking 22 financial institutions and over 1 200 corporate institutions in all sectors of the economy.
The payment system was also used by major banks including CBZ, CABS, Nedbank and Standard Chartered, among others, which have all been negatively affected, after they collectively refused to pay in US dollars since February, 2019.
Bankers Association of Zimbabwe (BAZ) executive director Sij Biyam, however, said yesterday that an alternative bulk payments system, Bank File Interchange System (BFIS), had been successfully developed and delivered to the banks, which he said were very happy with the product.
Banks had running individual contracts with Paynet Zimbabwe; a unit of Mauritius registered Cambria Africa unit, Payserv Africa, for the bulk payments system that was denominated in US dollars prior to scrapping of the 1 to 1 parity in February.
But after the parity policy was scrapped and the interbank market introduced under a liberalised foreign exchange system in February this year, the banks started refusing to pay Paynet invoices in US dollars.
Mr Shasha said at that point, banks were supposed to pay outstanding invoices of US$470 000 between February and April. Under a floated exchange rate system, Paynet Zimbabwe had lost nearly US$200 000 trying to buy US dollars on the market.
Following the dispute over the currency of payment, Cambria Africa Plc, said it had instructed its lawyers, Titan Law, to make damages claim of US$100 million over the breach of contract and loss of business caused by the banks refusal to pay in hard currency.
Cambria said it could not continue to accumulate losses by getting paid in local currency. Banks would also refuse to pay in US dollars as contractually agreed although the Reserve Bank had consented to Paynet or Payserv being paid US dollars.
Before the negotiations broke down completely, a flurry of communications happened between banks and Paynet Zimbabwe on an individual bank basis until it became clear that banks had taken a position as an industry that they would not pay US dollars.
And on June 12, 2019, Mr Shasha said, Payserv disconnected Paynet through which banks were linked to the bulk payments system and with which Paynet had signed contracts, which affected the efficiency and speed of all bulk payments in Zimbabwe.
Alternatively, banks started processing bulk transactions manually using spread sheets and flash drives which had little security cover or were insufficiently encrypted.
Banks would not pay US dollars, Mr Shasha said, despite paying for other software and technology based services in foreign currency running into several millions of US dollars.
While Stanbic, Agribank and Infrastructure Development Bank reportedly wanted to pay for the service in US dollars, Mr Shasha said it was clear that they were pressured into taking a common position as every other BAZ member.
The disconnection since June 12, 2019, resulted in the whole banking sector being thrown into a bulk payments crisis, which resulted in delayed processing of transactions, as banks shifted to manual alternative.
“There was no operational reason to deal with us as a cartel.
“They call themselves an association or committee but it’s a cartel, it’s a price-fixing cartel because that is why people don’t let people meet at those levels, it’s to avoid price fixing and anti-competitive practice,” he said.
Mr Shasha said prior to the initial currency changes in February, it did not matter where his company made money – Zimbabwe, Mauritius or London where Cambria is listed on London’s alternative investment Market – as payments would always come.
But after currency liberalisation, the company started incurring exchange rate-related losses given that the ever changing ruling interbank exchange rate increased the amount of losses incurred from a fixed service fee and he needed to cut the losses.
To make matters worse, Paynet Zimbabwe would require more than 80 days to invoice its clients, receive their payments and purchase foreign currency on the interbank market before remitting to Payserv, with the forex also becoming elusive, resulting in heavy exchange based losses.
Whereas out of the average transaction charge of US16 cents before the scrapping of the 1 to 1 parity between the US dollar and RTGS dollar, Paynet Zimbabwe would now have to pay US5 cents per transaction against an interbank rate of 8,83.
Mr Shasha said while Paynet had given its Zimbabwean clients the freedom to remain connected to its system despite being suspended, in order to receive payments from its clients who were not suspended, banks decided to cut off completely.
Paynet even decided to have an arrangement with the banks that would see them pay directly to its parent who would then pay Paynet, which held contracts with local banks, but the banks would not agree.
“Customers suspended by Paynet would continue to receive payment instructions in favour of their clients. Paynet would continue to provide free customer service to suspended clients with respect to the Paynet gateway to ensure they continue to receive their payments,” Mr Shasha said.
Mr Biyam said the BFI had been completed and banks were happy to have a system that replaces Paynet and this had been communicated to the Reserve Bank and Ministry of Finance. The BAZ director said the Cambria subsidiary had refused to be paid in local currency, which was the source of the feud.