Rwanda has approved the cultivation and export of cannabis even as the use of the stimulant for medical or recreational purposes remains illegal in the country.
The government is targeting to grow its export earnings from the global cannabis market valued at the $345 billion according to analysts New Frontier Data.
The decision has caused confusion with some warning it could be detrimental to the youth if tough controls are not enforced.
Rwanda's Minister of Health Dr Daniel Ngamije said that despite the government's intention to profit from the production and export of marijuana, its use in the country is prohibited.
"This will not give an excuse for drug abusers and dealers. The law against narcotics is available and it will continue to be enforced," Dr Ngamije said on state-run television Rwanda Broadcasting Agency on Tuesday.
A Cabinet meeting, chaired by President Paul Kagame, on Monday approved regulatory guidelines on cultivation, processing, and export of "high-value therapeutic crops".
While The EastAfrican has yet to see the guidelines by press time, a source from the Rwanda Development Board (RDB) told the paper that cannabis is the crop referred to.
Last year, RDB had invited companies to bid for the development of medical cannabis in Rwanda with a focus on the export market.
The production or sale of cannabis is prohibited in Rwanda. Doctors are banned from prescribing it as medicine, and doing so could land them in jail for two years and a fine of about Rwf3 million (about $3000), under Article 266 of the Penal Code.
Use of the narcotics attracts a jail term of two years, while drug dealers face between 20 years to life in prison, and a fine of up to Rwf30 million ($30,000).
A day before the approval, three women in Rubavu District were arrested for drug peddling after they were caught with 1,800 pellets of cannabis.
Analysts say that the government's latest stance causes confusion and will require an amendment of the Penal Code as well as public sensitisation.
According to the law governing narcotics and psychotropic substances, authorisation of production, distribution and use of narcotic drugs shall be delivered if their use is limited to medical and research purposes only.
The law further states that every authorised private or public enterprise selected can only retain the quantities of narcotics drugs that are necessary for the smooth running of the enterprise.
These, analysts say, are contradictory.
"Basically, the government is authorising the production of illegal drugs. The Penal Code should have been amended before the government came up with this decision to allow the mass production of cannabis for export. The law must be clear because it is creating confusion," Louis Gitinywa, a constitutional lawyer based in Kigali told The EastAfrican.
"There should now be some form of legal framework to support this decision, and to explain to citizens how this will work."
Mobile financial services are, in most African countries, born out of crises. In 2011, Zimbabwe had gone through a volatile decade of economic crises – hyperinflation, currency instability and a collapse of the formal financial system. Consumers, mostly employed in the informal sector, had a widespread mistrust of the formal banking system.
In came Econet, a major mobile operator, to launch a mobile money service called Ecocash. Taking advantage of the country’s high mobile penetration, the service had 2.3 million users within 18 months. Today, close to 90% of adult Zimbabweans use Ecocash. In addition, Ecocash paved the way for competitors such as OneMoney, Telecash and Mycash.
The economic crisis in Zimbabwe spurred the rapid adoption and use of mobile money. First came cash shortages coupled with higher cash withdrawal fees and lower withdrawal limits. Then loss of savings to soaring inflation and loan denials in the formal banking system engendered mistrust among consumers. This forced a government-led drive towards a cashless economy and non-cash transactions.
Mobile money transfers in Zimbabwe are mainly from one person to another. This allows for urban to rural money remittances for family support, payment for goods and services in retail settings and financial flows between the formal and informal business sectors. Another important use of mobile money is to store money securely in high crime areas.
An important benefit is the cash-in and cash-out functionality. This allows users to deposit cash into a mobile account through a mobile money agent and withdraw physical cash at a convenient time and place. They can avoid the long queues and withdrawal limits set by the formal banking system.
Despite the compelling value proposition that mobile money offers, the Reserve Bank of Zimbabwe recently placed significant regulatory restrictions on its operations. The regulator said mobile money services were fuelling illegal foreign currency exchange, money laundering and fraud, especially through the cash-in/cash-out service.
The restrictions followed the Reserve Bank’s audit of the four mobile money platforms, including Ecocash. It found that some accounts were opened using fictitious or unverified identification documents. There was also a rampant misuse of mobile money accounts for money laundering schemes and fraudulent overdrafts or fictitious credit. It also cited cases of foreign currency trading outside the formal channels.
Users are now restricted to just one mobile wallet account per person and a daily transfer limit of ZW$5,000 (US$50). In addition, users can no longer transact through mobile money agents. Their operations have been abolished.
As a result, close to 50,000 mobile money agents have lost their source of income. This is likely to affect customers in the rural areas of Zimbabwe who depended on the agents to access mobile money services. These agents gave rural consumers the opportunity to be integrated into the financial system.
The overall effect is that mobile money accounts can only be used for transacting but not “store of value” purposes. Store of value means savings or investment accounts. This is seemingly at odds with findings by academics and development practitioners that mobile money accounts encourage poor customers who are not well served by the formal financial sector to save regularly.
This is all the more so in a country battling with a shortage of banknotes and coins and the collapse of the traditional financial system. The stringent restrictions could stifle innovation among mobile money operators and hinder access to financial services for many unbanked Zimbabweans.
The blanket restrictions may have the unintended consequence of excluding legitimate merchants and consumers from accessing financial services. The new regulations also appear out of proportion to the risk. For instance, a tiered approach to know-your-customer regulation could have allowed the regulator to distinguish between risky high-value transactions and low-value transactions.
Zimbabwe has a national population registration system which is only accessible by authorised government workers. The ordinary mobile money agent would not have access to it. But customers without adequate identification could still sign up for a basic account with low transaction and withdrawal limits, instead of being excluded entirely from the financial system.
Alternative forms of identification could have been used for opening accounts. These could include utility bills or letters from local church and village leaders.
The mobile money agent network increased access to financial services in rural and hard-to-reach areas of Zimbabwe. Instead of abolishing the role of mobile money agents, the financial regulator could have reprimanded and fined agents found guilty of money laundering and the trading of foreign exchange without a licence.
The Reserve Bank also needs a financial sector policy that facilitates the development of safe and accessible mobile money services for Zimbabweans who currently don’t have access to financial services. This would require that all stakeholders, including the regulator, mobile money operators, telecommunication regulators and financial intelligence authorities, develop a collaborative regulatory framework.
Such a framework would seek to protect the integrity of the financial system from fraud and misuse. At the same time it would ensure that consumers and merchants enjoyed the full benefits of mobile money services. At all times, the end goal of greater financial inclusion must remain a priority.