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Oliver Kazunga Acting Business Editor
ECONET Wireless Zimbabwe says more than $200 million is being transacted per month through the telecommunication’s mobile money transfer platform, EcoCash, resulting in the transformation of the country into a cashless economy. Cashless economy refers to a society without cash, it uses digital money instead, transactions by digital devices such as mobile phones.
Among others, in a cashless economy, the society needs not to carry money in the form of coins and notes and this reduces insecurity and crime.
The phenomenon also augers well especially in an economy such as Zimbabwe where liquidity constraints have persisted since the adoption of a multi-currency regime in February 2009.
“There’s no question that EcoCash is filling a basic consumer need in one of Africa’s countries, where a great deal of the population has been excluded from the formal banking system. In a little over two years, the service has registered 31 percent of Zimbabwe’s adult population, a group responsible for more than $200 million in transactions per month, that’s about 22 percent of the country’s Gross Domestic Product (GDP) – using their mobile phones,” said the mobile operator in a statement.
At the moment, EcoCash among other services, enables companies to fund payrolls.
The introduction of the mobile money transfer service by the telecommunications company came at a time when cases of robberies perpetrated on cash in transit were on the increase.
The new EcoCash payroll system allows small businesses and large companies to distribute salaries and wages to employees using the platform.
However, critics say the development could be a major blow to traditional banks at a time when the Reserve Bank of Zimbabwe revoked an agreement on banks lowering bank charges. So far, organisations that have adopted EcoCash service include Zimbabwe Fertiliser Company, National Seeds, Zesa Enterprises and local authorities.
The telecommunications firm has said EcoCash was performing well as it now had three million subscribers since its launch two years ago.
Econet said the mobile money transfer platform was a way for it to diversify portfolios away from core voice and data business, where revenue growth has been weak.
With an early success on its hands, Econet is staking much of its future growth in Zimbabwe and other African countries in which it does business including Nigeria, South Africa and Botswana on non-voice revenues that come from services like the mobile money transfer.
The company’s chief executive officer for Econet services, Darlington Mandivenga, said their mobile money transfer platform was a strategic response to a strategic challenge.
“What is happening in the telecoms industry is that revenues are stagnant, if not on the decline, with (average revenue per user) under pressure for various reasons such as competition and market saturation,” he was quoted as saying in the statement.
It is believed that to help EcoCash become Zimbabwe’s dominant payment system for retail transactions, the mobile operator has embarked on an aggressive merchant acquisition campaign.
The company was sacrificing short-term profitability by paying out 80 percent of revenue in agent commissions to build a strong and dedicated network.
At the same time, Econet is using bank-grade technology to fast-track interoperability with Zimbabwe’s major financial institutions and make it easier to deploy new mobile services.
Online Reporter