adminTawanda Musarurwa
With traditional banks still largely constrained by their brick-and-mortar structures, analysts say financial technology (Fintech) companies in Zimbabwe have better business models to leverage on gaps in financial inclusion.
Some of the Zimbabwe Stock Exchange-listed Fintechs that are making headway in this respect are Cassava Smartech and Getbucks.
Market analysts Morgan & Co say the two companies will likely have a positive performance on the local bourse in the long-run.
“We believe in technology and remain long-term bulls on Cassava and GetBucks.
Econet Wireless’ technology spin-off, Cassava Smartech currently accounts for 18,17 percent of the ZSE’s total market capitalisation.
As at the start of this week, Cassava Smartech was only second behind Delta Corporation in terms of market capitalisation on the ZSE at $4,5 billion.
Cassava Smartech offers diverse range of smart digital technology solutions ranging from insurance, finance, health, education, agriculture, e-commerce, social payments.
Getbucks last week indicated plans to raise $5 million through a rights issue as it targets re-capitalisation on the back of growing loan demand after the company transformed from a pure micro-lender into a full-fledged microfinance bank.
The firms have emerged in the financial services sector to either compete with banks or to complement the functions of banks to their customers, but for Zimbabwe it’s more of the former as banks have largely resisted.
According to a Finscope study, a mere 30 percent of adults are banked.
The report also showed that Zimbabwean women are also largely excluded from formal financial services while they form the greater part (51,9 percent) of the population.
The analysts believe that these local Fintechs are strategically poised for long-term success insofar as they are moving to cover the country’s financial inclusion gap.
“Fintechs like Cassava and Getbucks are promising more than just the convenience to transact or get a small loan. They are holding the ‘financial inclusion’ card and they are clearly winning this game.
“In Zimbabwe, many people still remain excluded from the financial sector and this has created high levels of poverty. The majority (about 60 percent) of the people in Zimbabwe dwell in the rural areas. These rural dwellers are excluded from the financial mainstream and do not have good access to financial resources.
“Financial inclusion ensures access to appropriate financial products and services needed by all sections of the society at an affordable cost in a fair and transparent manner. Banks in Zimbabwe are now trying to play catch-up, but it appears that Fintechs like Caassava and Getbucks that have been on the forefront of promoting access to financial services are better placed to reap the technology dividend,” said the analysts in a note.
The International Monetary Fund (IMF) has said better policies can expedite the critical role that is being played by Fintechs in the Sub Saharan African region.
“Africa is well positioned to meet its Fintech and digital challenges, and with the right policies in place, it could reap a ‘digital dividend.’
“First, policymakers need to address the existing large infrastructure gap in the region, starting with electricity and internet services.
Secondly, Africa will need to balance the perennial demands of fast-moving innovation against the slower pace of regulation,” said adviser in the IMF’s African Department Amadou Sy in a recent blog post.
Bongani Ndlovu