EcoCash shrugs headwinds to posts solid results

EcoCash Holdings Zimbabwe Limited, formerly Cassava Smartech Zimbabwe Limited, reported solid operating results for the year ended February 28, 2021, despite strong economic headwinds in the country due to the coronavirus pandemic.

The group's financial results released this week gave a glimpse of how EcoCash Holdings navigated the negative effects of the Covid-19 pandemic and a difficult regulatory environment for the better part of last year.

During the period under review, EcoCash Holdings, whose shares were suspended from the Zimbabwe Stock Exchange early this month after it delayed publishing the results due to technical accounting matters, registered ZW$14.3 billion in revenues, with close to 80% of the income coming from its financial technology units.

EcoCash Holdings chairperson Sherree Shereni said while the year was challenging, the business – whose assets include mobile money, digital banking, payments services, international remittances, insurance, agritech, edtech, waste management, ride-hailing, logistics and e-commerce, among others – responded with agility and demonstrated resilience in the face of change.

"We therefore continue to be driven by our vision of providing a digitally connected future that leaves no Zimbabwean behind," she said in a statement accompanying the group's financial results.

Shereni added that EcoCash Holding's insuretech business' contribution grew from 9% in 2020 to 15% in the financial year ended February 28, 2021, largely attributed to the growth of the short-term non-motor insurance business.

At the same time, the group's Vaya Technologies unit also uplifted its performance contribution from 2% in 2020 to 7%.

"The group's revenue diversification strategy is paying off, as evidenced by the exponential revenue growth in the Insurtech and the Vaya Technologies business units. As part of its revenue growth strategy, the group will continue its focus on revenue diversification and innovation (going) into the future," she said.

"EcoCash's revenue contribution, at 60%, declined (from 75% in 2020) because of macro-economic factors as well as regulatory changes that took place during the year. Steward Bank's contribution remained stable and is expected to continue on the upward trend on the back of the system upgrade completed in April 2021."

In June 2020, the Reserve Bank of Zimbabwe introduced a number of regulatory measures on mobile money companies, resulting in the closure of over 200 000 EcoCash lines, payroll processing, bulk disbursements and the banning of agents. Ordinary consumers across the country were also banned from making cash deposits and cash withdrawals using EcoCash.

The move, in a mobile money sector where EcoCash is by far the market leader, together with the capping of daily transactional limits to $5 000, and the barring of multiple wallets per user, significantly affected mobile money's contribution to the group's growth.

Shereni indicated that although EcoCash Holdings' revenues closed the year at $14 billion compared to $19 billion in the prior year, due to the impact of regulatory measure and the Covid-19 pandemic, this was mitigated by a rigorous cost-cutting drive.

"Foreign exchanges losses decreased by 45%, to close the year at $4.6 billion from $8.4 billion in 2020. As a result, the EBITDA margin closed the year at 15% from 26% in the previous period. The focus, therefore, remains on innovatively driving growth, consolidating the gains of the cost-cutting measures, and further reducing operating costs in FY22," she added.

Going forward, the EcoCash Holdings chairperson said the strength and agility of the business, combined with the professionalism, resilience, and innovative foresight of its teams, was expected to carry the group into the future, with growing digital opportunities.

"Our technology-driven platforms and processes offer significant advantages, and we continue to drive innovations and deploy them where the need is greatest. Consistent with that, the group has continued to take advantage of this accelerated digital thrust to come up with new products and services that better respond to the evolving needs of our customers, guaranteeing a strong business that is transforming and is well placed to deliver sustainable growth into the future.

"We, therefore, continue to leverage our robust business model to innovate around on-demand technology platforms, creating customer convenience and maximising value for our shareholders," said Shereni.