Cassava Smartech revenue tumbles as Covid restrictions, policy changes take toll

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  • Revenue declined by 34% to ZWL5.4 billion
  • EcoCash revenue contribution fell due to regulatory changes
  • The Group is undertaking digital platform upgrades

HARARE – Cassava Smartech’s performance at the half year ended 31 August 2020 has been severely impacted by the ongoing Covid-19 induced interruptions on economic activity, as well as the pressure from various regulatory pronouncements, the Group said, with revenue tumbling 34% in inflation adjusted terms to ZWL5.4 billion from ZWL8.2 billion SPLY.

The business invested in a number of long-term initiatives to develop further, largely on the digital front with significant upgrades done on the EcoCash platform while the core banking system upgrade at Steward Bank is due to be completed in December 2020.

An offshoot of the Econet Wireless group, Casssava operates the mobile money business, EcoCash, banking services through Steward Bank, microinsurance through EcoSure and eCommerce. The Fintech segment comprising mobile money and banking services has been the largest revenue contributor to the Group’s overall performance. 

The half year saw operation restrictions placed on the mobile money services, such as suspension of all monetary transactions on phone-based mobile money platforms, operational modalities which include limiting daily transaction values per each subscriber as well as closure of agent lines in line with investigations over alleged money laundering activities.

“EcoCash revenue contribution, at 63% (2019: 73%) declined, both as a result of macro-economic factors and regulatory changes that took place during the period under review, as well as contribution from the exponential growth in the Insurtech and ODS business units,” the board Chairperson, Sherree Shereni said.

“Steward Bank’s contribution has remained stable and is expected to maintain that revenue share on the back of the system upgrade project due to be completed in December.”

She said the decline in Fintech business contribution to revenue is in line with the revenue diversification strategy of the Group.

“The Group’s revenue diversification strategy is bearing fruit spurred by the exponential revenue growth in the Insurtech and the Digital On Demand Services (“ODS”) business units. This is a validation of the Group’s smartech business model which augurs well for its future outlook”.

Meanwhile, exchange losses continue to weigh-down on business performance, with an amount of ZWL2.4 billion having been recorded in the period under review in respect of the foreign obligations that the Group currently has. Foreign liabilities at the end of the period amounted to US$ 40.1 million, of which US$ 31.4 million comprise of the Group’s obligation with respect to the debentures issued by Econet Wireless Zimbabwe Limited prior to the demerger in 2018.

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