LEADING research firm Inter Horizon (IH) Securities says EcoCash Holdings Zimbabwe’s continued innovation and introduction of new products and services indicates a potential to grow its revenue.
EcoCash has introduced a range of products and services aimed at addressing the needs of ordinary Zimbabweans.
It re-launched the EcoCash Express Debit Card, which is linked to customers’ EcoCash accounts and empowers them to swipe, withdraw cash, or transact at any MasterCard terminal or ATM and pay for goods online at zero monthly fees.
Steward Bank launched Steward Pay, an online payment gateway that facilitates the processing of local and international payments online via VISA, Mastercard, EcoCash and Steward Bank Accounts.
The digital bank also launched the account opening platform, Q-Not, in April.
In its recent half-year report ended August 31 2023, EcoCash managed to overturn its loss-making position into a ZW$130,19 million profit after tax due to a 254,43% forex gain.
In the comparative 2022 period, the company posted a loss of ZW$1,68 billion.
Based on these encouraging results, the company stated that it remained focused on developing innovative and inclusive products to improve the customer experience and ensure equitable access to financial and other digital services.
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Volumes are on the increase on account of increased USD wallet anchored by agent roll out where cash-in is increasing.
The company says in the informal sector, USD wallet adoption is on the rise and EcoCash tariffs were lowest in the market at 1,3% of transactions for peer-to-peer, 1,7% for cash out and 1,7% for merchant payments. Transactions are free for Zesa and airtime payments.
In an analysis of EcoCash's report, IH Securities said EcoCash continues to focus on improving financial inclusion and will carry on with investments in digital transformation and leveraging on smart technologies.
“The group’s continued innovation and introduction of new products and services indicates potential to grow its revenue,” it said.
“However, in the mobile money segment, transaction volumes at the national level have maintained a downward trend, going from 50,03 million in March to 42,65 million in August, pointing to likely sustained pressure on operations within the group’s FinTech unit.”
IH Securities also expected that constrained consumer liquidity from the negative impact of the El Nino phenomenon on the agricultural sector would further negatively affect incomes, thus impacting EcoCash's revenue capacity.
While the period under review was underway, EcoCash maintained its national expansion in the mobile money sector and provided a variety of goods and services to meet client needs.
To boost their foreign exchange earnings, the management deliberately expanded the list of merchants, who would take EcoCash US dollar payments.
Many banks are also now integrated to the EcoCash USD wallet, with Zimswitch activation expected at the end of this month.
“The group also re-launched the EcoCash Express Debit Card, which is linked to customers’ EcoCash USD accounts, allowing them to swipe, withdraw cash, or transact at any MasterCard terminal or ATM. Steward Bank also saw further digitisation during the period through the adoption of new technologies,” IH Securities said.
“The bank rolled out a Digital Agent Banking Portal that automates banking services offered by the bank’s agents to increase accessibility to these services, in addition to Q-Not, a digital account opening platform enabling customers to open full KYC (know-your-customer) accounts remotely.”
The FinTech business, which encompasses EcoCash and Steward, benefitted from these new product innovations and growth in forex revenue contribution.
Resultantly, revenue for the group grew 499,52% in historical terms to ZW$ 163,17 billion in the first half of 2023, with FinTech driving 76% of total revenue whilst InsurTech and Digital Platforms contributed 20% and 4%, respectively.
IH Securities expects that increased competition in the USD mobile transfer space will exert pressure on the business’ strategy to diversify earnings.
EcoCash successfully raised the US$30,3 million required to redeem its debentures following a rights offer during the first quarter of its 2024 financial year.
“This is expected to eliminate exchange losses arising from debenture-related liabilities, which will have a positive impact on the bottom line,” researchers said.
EcoCash said macroeconomic uncertainties characterised by hyperinflation, rapid changes in policies and challenges in accessing foreign currency had resulted in a challenging operating environment for the group.
“The group will continue to adopt mitigatory measures, within the bounds of the country’s laws, to minimise the adverse impacts of the challenging operating environment,” it said.
“The directors have assessed the ability of the group to continue operating as a going concern subsequent to the date of authorisation of the half year interim consolidated financial statements. The directors believe that the preparation of these financial statements on a going concern basis remains appropriate.”
The exchange as at August 31 2023 was at US$1:ZW$4 608,10 and US$1:ZW$546,82 as at August 31 2022.