Harare – AIM listed Cambria Africa which has a significant exposure in Zimbabwe’s fintech sector, swung to profitability driven by a surge in fintech solutions and the deepening financial inclusion in Zimbabwe.
Cambria Africa Plc (AIM: CMB), is an AIM listed investment company holding controlling interests and active management control in Payserv Africa and Millchem Zimbabwe both operating in Zimbabwe.
Paynet is an outsourced payment transfer platform which allows for a secure and convenient way of sending payment instructions in Zimbabwe. The company’s performance stems from a deepening financial services sector in Zimbabwe in line with digitisation.
Over the past 2 years Zimbabwe’s financial service sector has seen a growth in electronic money usage as well as mobile money transfers. The surge in turn is a response to the country’s acute cash crisis and a surge in money supply, which Paynet has been able to capitalise on.
Among the company’s clients are the government of Zimbabwe, NGOs among other private sector players.
According to the Group’s financials, Paynet facilitated 27.7 million transactions in FY 2018 representing 40 percent of Zimbabwe’s electronic transactions by value.
Paynet said its branded software is subscribed to, by all government departments, insurance entities and 5 500 of the largest corporate entities in Zimbabwe, reaching over 2.5 million beneficiaries.
The company, however, noted that recent political unrest in Zimbabwe had dimmed the outlook for foreign investment.
The group’s net profit emerged from a loss position of $0.35 million to a profit of $1.9 million in the period under review spurred by a 10 percent growth in revenue to $9.4 million.
Turning to the economy, the company, in a statement accompanying the financials said the outlook for direct foreign investment and balance of payment support for Zimbabwe significantly dimmed following violent protests and the ensuing clampdown by government forces.
“Historically, companies that have survived such seismic shifts in the country’s fortunes have come back stronger and more profitable.”
Going forward, the Group said that, despite the skirmishes in Zimbabwe it expects to survive the dislocations created by these events.
“As some investors turn away, Cambria’s management feels that it will have an opportunity to capitalize on new opportunities at significantly lower investment costs than before.
“It is our opinion that the recent events will push Zimbabwe into closer economic cooperation with South Africa and in turn this will be a strong basis for a turnaround in the economic and political stability of Zimbabwe.
“Payserv Zimbabwe expects to continue to receive funding at 1:1 to the US Dollar to pay license fees and repay loans. Although it would be reasonable to expect a rise in overhead costs for Payserv and Millchem, the reorganisation completed by Payserv in FY 2018 should save the company about $400,000 annually in cost-to-company salaries, allowing it to absorb a significant portion of such an increase.”
The Company said it reduced its cash position in Zimbabwe to minimal levels before the start of the current turbulence through investing its available cash in beneficial ownership of Radar shares, adding that at the date of this announcement, cash resources outside Zimbabwe (in “real” US dollars) total $1.1 million and it continues to be actively considering a number of investment opportunities.
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