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EcoCash, the leading mobile payment platform in Zimbabwe, saw a surge in US dollar denominated transactions in the quarter ended May 31, 2023, after the government reduced Intermediated Money Transfer Tax (IMTT) from 2 percent to 1 percent.
The government introduced a 4 percent tax on mobile money payments in May 2022 as a way of promoting the use of local currency.
However, it soon reduced it to 2 percent in January this year, before further reducing it to 1 percent after the move had a huge toll on business transactions, and in the process affecting money transfer firms’ performance.
EcoCash Holdings Zimbabwe Limited Company Secretary Charmaine Daniels said despite operating in a challenging operating environment, EcoCash transactions increased eight times their previous amount, marking a significant milestone for the fintech industry.
“Adoption and use of our USD wallet on the EcoCash platform has grown steadily during the quarter, with an increase in the number of active users, which has resulted in an eight-fold increase in transaction values, as customers took advantage of the convenience and reliability of our mobile money platform,” she said in a trading update published last Friday.
This impressive growth comes at a time when there is a rapid increase in demand for digital financial services. According to national statistics agency, Zimstat, more than 75 percent of transactions in Zimbabwe are now in US dollars.
Mrs Daniels noted that EcoCash domestic currency (ZWL) wallet continued to be widely used, supporting the government’s efforts to promote local currency transactions.
“We launched new features during the quarter, including 3D Secure Payments allowing secure and seamless USD payments for online internet transactions through the EcoCash MasterCard debit card, which has been well received by our customers,” she said.
In the period under review, EcoCash Holdings’ banking unit, Steward Bank, witnessed notable gains in its FCA product portfolio, consistent with market changes.
“There were notable gains in active FCA accounts which grew by 56 percent compared to the same quarter in the prior year. VISA Card volumes have also seen improvement by 59 percent. A growing loan book had a positive effect on interest income revenue contribution from 20% prior year to the current quarter’s contribution of 29 percent. The bank remains compliant with its capital position,” said Mrs Daniels.
In the quarter to May, the Zimbabwe Stock Exchange-listed group’s insurtech segment focused on preserving value for its customers while offering products that provide flexible and affordable coverage options to clients.
“Our life insurance subsidiary performed well during the quarter with a growth in USD policies from 3 percent to 56 percent in the quarter under review,” said Mrs Daniels.
She noted that the short-term insurance business saw a 116% growth in total policy-holders at the end of May 2023, compared to May prior year. The growth was evenly distributed through all revenue lines.
EcoCash Holdings’ digital platforms continued to focus and drive the anchor businesses in Healthtech and On Demand Services.
The quarter under review saw the launch of a smart solution called Asset Track, which allows businesses and individuals to remotely track their electronic assets.
“The Internet-of-Things (IoT)-enabled innovative solution shows a deliberate investment in improving our existing product offering, with the introduction of advanced features aimed at better user experiences. We are confident in the ability of these growing businesses to contribute to the broader EcoCash Holdings Group’s performance,” said Mrs Daniels.
She added that the Group will continue to invest in our people, technology, and partnerships to drive growth and deliver value to customers and shareholders.
Online Reporter