Recently, the GSM Association released a case study report they did on EcoCash this year. The case study focuses on EcoCash’s rapid uptake since launch in September 2011 with a look at how the company has managed to register 2.3 million Zimbabweans in under two years. It also looks at the strategy going forward as EcoCash evolves from just a money transfer service to a payments solution.
The report, titled “Big ambition meets effective execution: How EcoCash is altering Zimbabwe’s financial landscape“, also provides some new statistics not released before on what Econet spent to drive EcoCash usage, the new company’s (Econet Services that is) organisation structure, staffing & execution strategy, and other things.
The subscriber and usage numbers are an update from the last released by the company in May when it published its annual results. The number of subscribers for example, you will notice has increased by 200,000 from the 2.1 million announced then.
Here are some main points from the report:
Subscribers & the money
- Econet has registered 31% percentage of Zimbabwe’s adults since launch. The number of registered subscribers outnumbers all of Zimbabwe’s bank accounts combined.
- Over 1 million of these accounts are active and push US$200 million of volume over the EcoCash platform every month.
- Remember those EcoCash people in the streets that would register you and have your airtime credited with a dollar? According to the report, they accounted for approximately 75% of EcoCash subscribers. As brand ambassadors, they were expected to bring in 25–30 subscribers per day.
- Over 2 million dollars in airtime was spent as registration bonuses to new subscriber
- Econet now has 4,000 EcoCash agents, and a subscriber:agent ratio of 250–600 active subscribers per agent.
- Of the 5 integrated banks, EcoCash registers approximately 200 customers per bank each month. These bank customers transfer an average $145 a month between their bank accounts and EcoCash wallets.
- EcoCash is now doing $200 million in monthly EcoCash transactions. When annualised this volume represents an amount equivalent to 22% of Zimbabwe’s GDP.
- EcoCash is paying out 80% of revenues in the form of agent commissions to build a strong and committed agent network.
- Despite the large user numbers, senior management does not expect EcoCash to break even until three years after launch.
- The domestic P2P business was purposefully designed with thin margins. EcoCash plans to recoup its investment from what it sees as a larger and more profitable ecosystem built around banks and retailers. The P2P transfers are therefore just a first step towards a much bigger goal: becoming the dominant payment system in Zimbabwe for the banked and unbanked alike.
- Econet now looks to change the perception that EcoCash is just a P2P money transfer service and convince the market to see EcoCash as the main financial tool in their daily lives. Hence “Live life the EcoCash way”
The report has some very interesting information on the challenges Econet faces in its effort to make mobile phones the instinctive ‘cash’ that people reach for to make payments. Merchants, for example may question why they should pay a fee to accept a payment when they currently don’t with real cash. Econet’s task is therefore to show that it’s actually cheaper to pay a fee than to handle cash. Another challenge is that subscribers are not keeping money in their wallets which means that they have to deliberately load their wallets in order to have enough balance for retail payments. Living life the EcoCash way therefore means having money ready in the wallet to use for anything a person needs to buy.
In mentioning challenges and possible solutions, the are some things the report missed. The first is how EcoCash has been viewed as “too expensive” and how this has actually worked against its adoption. The typical response we get when we casually ask people why they didn’t use EcoCash to move money or make a payment, the response is almost always that EcoCash is too expensive. Even though Econet has moved to correct this by lowering fees, that tag is yet to go away.
The second challenge not mentioned is that EcoCash has had a less than friendly relationship on some occasions with some major banks in the country. This is noteworthy because the report says Econet recognizes that full interoperability with Zimbabwe’s banks is crucial to its success as there is significant money flow between banked and unbanked families.
You can download the full report here.