Zim dollar fall haunts Cassava operations

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  • Foreign liabilities amounted to US42.8m
  • The Group recorded inflation-adjusted revenue of ZWL4.6bn
  • Gross profit margin increased by 68%

Harare – Zimbabwe Stock Exchange (ZSE)-listed tech heavyweight, Cassava Smartech Limited incurred foreign exchange losses amounting to ZWL2.0 billion during the year ended 29 February 2020 as a result of the continued depreciation of the Zimbabwe dollar against the US dollar over that period.

The Cassava SmarTech business unit houses the mobile money business, EcoCash, banking services through Steward Bank, microinsurance through EcoSure and eCommerce.

With a significant foreign exposure, the Group had net foreign liabilities amounting to US$42.8 million, of which US$30.5 million comprise of the Group’s 50% allocation of the overall liability in the debentures issued by Econet Wireless Zimbabwe Limited.

In a statement accompanying the Group’s financials for the period under review, Group chairperson Sherree Shereni highlighted that the business revalued its property and equipment for the year ended 29 February 2020 as the associated value in Zimbabwe Dollars was no longer meaningful due to inflation.

“Most of the Group’s tangible and intangible assets were procured in foreign currency”.

During the period under review, the Group recorded an inflation adjusted revenue of ZWL4.6 billion, compared to four months revenue for the period ended February 2019 of ZWL1.1 billion.

According to Shereni, this increase was spurred by the mobile money and banking businesses which contributed 89% of total revenue for the year. This was a slight decrease from a 91% contribution in the previous year. The Group however described the decline in percentage contribution for the Fintech business segment as a reflection of the positive effects of the group’s revenue diversification strategy.

The ongoing transformation of the business within the Group remains a priority as we work on scaling up the new businesses and diversifying our revenue earnings for sustainability,” Shereni said.

Meanwhile, the Group saw growth of Agritech and Moovah revenues largely driven by the digital on-demand agriculture platform catering for both small holder and large scale commercial farmers, as well as the non-motor business for the short term insurance business unit.

The Group recorded an increase in gross profit margin to 68% from 57% in 2019 and in the EBITDA margin to 29%, from 27% in the prior year.

Reflecting on the Group’s growth strategy, Shereni said the success of “our” business is predicated upon the stability, efficiency and effectiveness of our technology platforms.

“The Group is cognisant that our customers entrust their confidence to us based on our continued ability to deliver a consistently high quality of service.”

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