• Profit Turnaround: EcoCash has recorded a profit of ZWL 130 million for the half-year ended August 31, 2023, marking the first profit since 2019
• Revenue Milestone: The Group's revenue reached ZWL 217.6 billion, surpassing the ZWL 100 billion mark for the first time since the reintroduction of the Zimbabwe Dollar in 2019
• Embracing Digitalization: EcoCash’s insurtech businesses invested in enhanced technologies, such as online payment gateways and expanded distribution networks, to improve service delivery, operational efficiency, and claim processing times

Harare- EcoCash Holdings Zimbabwe, has announced its return to profitability for the half-year ended 31 August 2023, marking the first half-year profit since 2019. This is also the first time the Group’s revenue has surpassed the ZWL100 billion mark.

According to the latest financial update, the Group reported a profit of ZWL 130 million, marking a substantial improvement from a loss of ZWL 1.6 billion. This turnaround was attributed to a forex gain of 254.43%, demonstrating the positive impact of foreign exchange fluctuations on the company's financial position.

The Group's revenue also witnessed a notable increase, reaching ZWL 217.6 billion. This milestone is particularly significant as it is the first time the Group has surpassed the ZWL 100 billion mark since the reintroduction of the local currency, the Zimbabwe Dollar, in 2019.

The positive financial performance of ZWL 130 million represents a significant achievement for EcoCash Holdings. Not only is it the Group's first profit since the rebranding from Cassava SmarTech, but it also marks the first profit recorded since 2019 when the company operated under the previous name. In 2019, the Group reported a profit of ZWL 3 million, a notable improvement from the ZWL 103 million loss incurred in 2018.

EcoCash Holdings is a prominent financial services provider in Zimbabwe, with a strong focus on mobile money services and digital financial solutions. The company was established in 2011 as a subsidiary of Econet Wireless, which is the largest telecommunications company in Zimbabwe. The group listed on the Zimbabwe Stock Exchange on December 18, 2018. Its shares are to date traded under the ticker symbol "EHZL," providing investors with an opportunity to participate in the company's growth and success. EcoCash combines its expertise in telecommunications and financial services to offer comprehensive digital financial solutions in Zimbabwe.

Since 2020, during the onset COVID-19 pandemic, EcoCash Holdings experienced losses despite the potential for profit. The outbreak of the pandemic led to a shift towards hybrid working arrangements, favoring digital financial services. Banks were particularly favored during this period, and EcoCash, with its large base of Econet clients, emerged as the preferred and most convenient method for sending and receiving money.

However, despite the favorable market conditions and increased demand for digital payment solutions, EcoCash Holdings recorded losses since 2020. In 2020, EcoCash faced challenges due to changes in the regulatory system, which is in line with the traditional practices of Zimbabwe. The year was marked by significant regulatory developments that had a notable impact on the company's operations and revenues.

On April 21, 2020, the Reserve Bank of Zimbabwe (RBZ) implemented new regulations that reduced the daily, monthly, and transactional limits for EcoCash and other mobile money service providers. These limits affected the company's revenue streams through charges on transactions. Prior to the RBZ directive, ZIPIT users could transfer a maximum of ZWL$100,000 per day, equivalent to ZWL$3 million per month. However, the RBZ slashed these transaction limits to just ZWL$20,000 per day and ZWL$100,000 per month.

On May 4, 2020, the RBZ suspended all agents with transactions exceeding ZWL$100,000 and mandated their re-registration. The central bank instructed EcoCash and other mobile money service providers to freeze accounts belonging to agents with transaction activity above ZWL$100,000. This regulatory action affected over 53,000 EcoCash agents and approximately 11 million customers nationwide who relied on the agent network for their financial transactions.

On June 27, 2020, the RBZ announced the suspension of certain user categories and functions within the EcoCash platform. Specifically, bulk payments for processing salaries and wages were restricted to banks only. This suspension impacted services such as EcoCash Payroll and NetOne's OnePay, which were no longer permitted to facilitate bulk salary payments.

On August 25, 2020, the government made further revisions to mobile money limits and permissible transactions in alignment with the directives of RBZ. In compliance with these regulations, EcoCash implemented a daily transaction limit of ZWL$5,000. This limit applied to all individuals, meaning that any individual could only transact up to ZWL$5,000 per day.

That marked the beginning of a difficult period for the company. These challenges had a significant impact on the company's operations and financial performance. The disruptions caused by the regulatory changes in 2020 affected the growth trajectory. The spillover effects of the regulatory challenges in 2020 continued to impact the group's growth efficacy in subsequent years, including 2021 and 2022. It is plausible that the company needed time to recover from the setbacks and adapt its business strategies to the evolving regulatory environment.

the Group continues to face various challenges from hyperinflation to regulatory and liquidity crunch. EcoCash has to contend with hawkish corporate taxes. High charges on transactions have been a concern for EcoCash and other mobile money service providers. Transaction fees and charges imposed on customers can affect the affordability and attractiveness of using mobile money platforms. These charges may discourage usage and potentially lead to a decline in customer base or transaction volumes.

To address these challenges, the group has been leveraging the use of US dollars amid ZWL liquidity crunch, which is a more stable currency compared to the local currency affected by hyperinflation.

Moving ahead, the Group will continue to capitalise on technology and digitalization as a strategic approach. In the reviewed period, the Group reintroduced its EcoCash Express Debit Card, which is connected to EcoCash USD accounts. This initiative empowers users to make payments, withdraw cash, and conduct transactions at any MasterCard terminal or automated teller machine (ATM). 

Steward Bank, a subsidiary, has embraced digitalisation by introducing Steward Pay, an online payment gateway that facilitates both local and international transactions through a variety of payment methods. The bank has launched Q-Not, an innovative platform for opening individual accounts online, which marks a first in the market. By implementing Automated Customer Feedback Collection on their online banking platform, Steward Bank has further enhanced the customer experience and fostered the development of customer-centric products.

EcoCash Holdings' insurtech businesses have made significant investments in advanced technologies to enhance service delivery, operational efficiency, and expedite claim processing times. Moovah, the short-term insurance business, has implemented an online payment gateway and expanded its distribution network to reach a wider customer base.

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