When a company manages to flourish within a challenging political and economic context, it’s clearly doing something right. Zimbabwe’s financial conditions have included slow growth, rising unemployment and debt distress. The El Niño-induced drought hit its economy as did lower commodity prices, the appreciation of the US dollar and insufficient external inflows.
However, the International Monetary Fund revised higher Zimbabwe’s economic growth forecast (from 2% to 2.8%) in 2017 and the conditions of doing business are expected to improve.
Meanwhile, Econet Wireless, Zimbabwe’s leading telecommunications provider, has been going from strength to strength since it launched its network in the country in July 1998 and listed on the Zimbabwe Stock Exchange in September of the same year. In 2009, Econet became the
first operator in Zimbabwe to launch data services using 3G technology. Today, it is one of the country’s largest companies.
The Econet group encompasses a host of businesses, including Liquid Telecom, which was behind the 2009 launch of a high-speed, cross-border fibre network connecting southern Africa with the wider world, and Kwesé TV, a pay as you watch satellite television service that has now reached across the continent and is visible in countries including South Africa, Dubai and Kenya. Appropriately for an enterprise with international ambitions, kwesé means “everywhere” in the main Zimbabwean language of Shona.
From its telecoms roots, Econet has diversified into several fields aimed at improving the lives of Zimbabweans through digital technology, following a business model structured around a broader telecommunication, media and technology (TMT) framework. One recent major success has been growing within the technology sector. The EcoCash brand, which launched in 2011 to provide a mobile financial technology solution to Econet’s customers, was highly commended in the Finance for the Future Awards 2017. “EcoCash falls under a subsidiary company of Econet Wireless, called Cassava Fintech,” explains EcoCash CEO Natalie Jabangwe-Morris. “It is a pan-African firm whose premise is to drive mobile payments, ecommerce, and mobile insurance across the African continent.
“We provide a huge array of unique services, allowing peer-to-peer payments, the ability to use your mobile money from your ‘wallet’ on your mobile telephone to pay a retailer or restaurant, for example. The equivalent would be going into Sainsbury’s and buying a loaf of bread with your phone. We also offer utility bill payment for water and electricity and, because we have the telecoms company, we sell over 70% of the air time of Econet Wireless Zimbabwe through the mobile money platform.”
EcoCash’s reach goes further still, Jabangwe-Morris adds. “We provide a connection with the diaspora, where Zimbabweans abroad in South Africa and the UK, for example, can send money in real time to their friends and family at home, directly into their mobile wallet, which they can then cash out via any one of our agents.”
The company also offers loans – using bill payments for its telecoms service to provide proof of eligibility – and micro insurance products. There is a savings wallet too, allowing individuals or groups to put money aside; and, the most recent addition to EcoCash’s offering, a platform for trading securities and investments.
The idea for EcoCash was born out of necessity. For years, Zimbabwe endured economic turbulence and a long period of hyperinflation. Having turned its back on the Zimbabwe dollar in 2009, it was trading mainly in US dollars. The country was facing a severe cash crisis, and EcoCash was created as a means to help people, and the banking sector, through it. “EcoCash was a strategic solution to a challenge that Zimbabwe was facing,” confirms Jabangwe-Morris.
“As a result of hyperinflation, citizens had lost complete trust in the banks and the nation was really starved of deposits in the banking sector, because the people were not bringing their deposits. They couldn’t trust that their money would be safe. As a telecommunications company, we were pivoted on solutions provision and on addressing problems through the use of technology.”
Banking on innovation
There was another problem to be solved, too. “At the start of launching our service, only 10% of Zimbabweans were actually banked,” says Jabangwe-Morris. “Financial inclusion was very small, so we though, why not innovate around a new know your customer model?” EcoCash was designed to ease the cash crisis and aid financial inclusion, using airtime-purchasing history for mobile phone use as a credit-referencing tool. A million new customers joined the EcoCash service in its first six months. “At the time, we recorded the fastest rate of consumer acquisition in the world, which shows just how appropriate and relevant the solution was in terms of addressing the problem in Zimbabwe,” says Jabangwe-Morris.
The people of Zimbabwe were, it appears, supremely ready for the service the enterprise was offering. Instead of queuing at the cash-starved banks in the hope of making withdrawals from fast emptying vaults, people were able to transfer money from their account to their phone wallet, which allowed them to spend, to transfer money to friends and family and to use their funds, even if they could not physically hold the money in their hands. The majority of Zimbabwe’s banks now work with EcoCash to allow their customers to move money around.
It was not the first to provide mobile money services in Zimbabwe, but the company has certainly had the greatest impact on the sector. Nepias Matsuro, CFO of Econet, says: “I think what stands out clearly is that we managed to roll out our services much faster than any other operation in the world. The manner in which we launched our services, under a good finance strategy, allowed the business to achieve significant milestones in the shortest possible time. There was no sacrifice in terms of profit, and we worked within our values. We put people first, so we sought to positively transform peoples’ lives.”
If the figures were impressive in the beginning, they have lost none of their lustre now. “Within the first six years of launch we are now driving more than 54% of Zimbabwe’s GDP. In terms of financial inclusion, within that short space of time, with good financial and business leadership, we have seen more than 80% of the adult population of Zimbabwe getting on to the platform,” says Matsuro. “So the result is that their financial inclusion has improved exponentially. And if you look at the number of transactions on the Zimbabwe national payment platform, 81% of transactions are driven by mobile money solutions, of which EcoCash occupies 99% of the market share.”
To the rescue
It was this drive towards sustainability that Matsuro believes the judges in the Finance for the Future Awards saw as worthy of recognition. He adds: “In an environment that was heavily affected by hyperinflation and liquidity challenges, EcoCash rescued the nation in terms of digital payments; without EcoCash, it would have been very difficult to drive the digital adoption agenda.”
Econet has the lion’s share of Zimbabwe’s mobile telephony market, with around 10 million customers currently signed up to the network. Of those, some seven million are now EcoCash customers – pretty good going for a country with a population of around 16 million. And, says Matsuro: “We have headroom to bring the three million remaining customers into EcoCash so that we have 100% of our customers using the mobile money platform.”
The company has its sights set on improving the flow of business to business transactions, an area in which it sees significant opportunities. And as the country on the whole has demonstrated an enthusiasm for digital payment services, the prospects are looking good.
But Zimbabwe, of course, is going through another period of change and it may take a while for the dust to settle and the way ahead to become clear for businesses. “What we do is look for opportunities; our business model is designed to seize any opportunity that arises, because we are designed to solve problems,” says Matsuro.
Meanwhile, it is Jabangwe-Morris’s belief that the country is feeling cautiously upbeat about its future prospects: “There is a lot to watch. It is too early to tell, and there is a big job to be done, but there is a lot of optimism and hope,” she says.
Whatever the future holds for this southern African nation, Econet sees its own potential reaching far beyond the borders of Zimbabwe. Having succeeded in keeping money flowing within the country, and having ensured inflows from the diaspora across the globe, EcoCash is now looking at a pan-African approach to the mobile payment agenda. “We are not limited to Zimbabwe,” says Jabangwe-Morris. “We already touch the lives of people in Australia, the UK, America... We are not restricted by boundaries, so we are already in that space, but I think our task is to consolidate our model in such a way that we can roll out our services much faster.” She adds: “We are also now in Burundi, Lesotho and South Africa. We are consolidating our offering across Africa as a continent and we see that accelerating.”
But, she says, at the heart of Econet’s plans is a push for social transformation. “At Econet Wireless, our mission and vision statement has always been to pioneer and lead in providing Zimbabwe with world-class communication services. We were the first people to introduce the cell phone because of our mission statement. In trying to address the financial services gap in the country, we wanted to do what we have done with telecoms.
“We pivoted on that mission vision statement and asked, how can we provide world class financial services for every Zimbabwean? So that social transformation is the thing that drives us every single day, with all the products we have launched. Providing that social transformation and equality in terms of what people should be able to do with financial services, just as we have with telecoms. We believe in doing well by doing good.”
Entries for the 2018 Finance for the Future Awards will be open from 12 March. Visit financeforthefuture.co.uk