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EcoCash is under threat – gvt to blame BUT underlying problem is EcoCash/Cassava/Econet

Yesterday a colleague mentioned that they were denied using EcoCash at a service station. All other forms of payment were acceptable except EcoCash. This didn’t surprise me. First let’s make sure those who have been living under a rock are caught up:

On Friday the 26th of June 2020, the Government of Zimbabwe declared that all mobile money (of which EcoCash has 98% share of market) was suspended with immediate effect. The government then made a face saving ‘clarification’ which was that all agents had been suspended but all transactions could proceed as normal except that merchants have no other way to move money out of their merchant wallets besides transferring it into linked bank accounts.

This is a problem for EcoCash

If merchants start discouraging the use of EcoCash for purchases it’s a serious threat to EcoCash. It makes sense though that merchants would do this because of the limited flexibility they are now offered on the platform.

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Suddenly EcoCash is in a position where their utility to users is now less than it was. The payments company has gone into overdrive promoting their service. They are particularly promoting liquidations unto their platform which currently due to agent suspension can only happen through moving money from bank accounts unto the mobile wallet. Here is an example of EcoCash promotional material:

EcoCash is now forced to campaign for bank account opening, this is something that they never would have done.

Sadly for EcoCash, money can now only come on to their platform through banks and therefore they now need to have as many people as possible opening bank accounts. The government really handed them one this time.

The gvt is not the biggest problem

Ultimately what poses a threat to EcoCash is EcoCash itself and the organisational culture into which the fintech was born. The Econet group (Yea Econet Wireless, Cassava…) sucks at customer service and more importantly at customer centred product design. This is what makes EcoCash vulnerable. Let’s try to trace that one out a bit:

How EcoCash won in the first place

We have documented EcoCash’s excellent strategy from the time it was founded in a write up we did two years ago. What they did well was to copy MPesa in Kenya really well and more than that, they were able to translate what they saw in Kenya to their context in Zimbabwe for example by choosing to base their service on USSD and not via SIM Toolkit.

The decisive factor however, was that Econet (at that time this was just an Econet product) understood that mobile money was a two sided market which requires figuring out the chicken and egg problem effectively. They went all out to recruit agents that would facilitate liquidations onto and off the mobile money platform. At launch, the service already had a very strong network of agents which gave it utility for internal remittances immediately.

EcoCash never rested on their laurels, they kept expanding their agent footprint. They started recruiting merchants too: businesses that would receive payments via the mobile money service. As users saw utility in the services, they signed up in droves. The more users signed up, the more merchants and agents were attracted to the service creating a vicious cycle. That, ladies and gentlemen is what they call network effects.

Markets with network effects are generally ‘winner takes all’ kind of markets. Indeed, EcoCash took it all. They dominate the space. Their dominance made them refuse to compromise when they dictated negotiated terms with banks to integrate with their system. Some banks held out for a bit but the service was just too dominant in the retail and peer to peer payments space that literally all banks capitulated and accepted the EcoCash terms.

Customer as a trapped victim

In the USA Facebook is a bigger deal than it is here. The social networking site is used by everyone and their dog kind of. Facebook the company is hated though. I have heard a lot of folks from the USA saying they were going to leave Facebook but then they never do. Reason: network effects. When everyone is on there, moving away means you are cut off.

That is the beauty of network effects but that is also the problem. Network effects make customers stick with a business because they can’t leave not because they want to stay. I believe that is the case with EcoCash and Econet in general. Their customers really love to hate them but they feel they need them.

It sounds like an enviable position right? To be needed, not just wanted. On the internet though where competition is unlimited, the only solid way to win is to be wanted. This is why Econet has always struggled with products that inherently need to have internet assumptions. The group is excellent at leveraging licenses and such but they are not at all good at actually building products.

What happens when they fall out of favour with the guy who dishes out licenses as has happened with EcoCash? They need to fall on customer choice, customers that are fans who believe that EcoCash just works. Do they have such customers though? I do not know if they do.

The reason why some merchants are declining EcoCash is evidence that the EcoCash customers themselves are not raving fans that will go to the next store if they can’t pay using their beloved EcoCash.

Put another way: if the only way one can fund their EcoCash wallet besides being sent money by someone else is through the bank, why should they move money to EcoCash since they can just make payments directly from their bank account? Is EcoCash cheaper? Is it faster? Is it simpler? No. No. No. There lies the problem.

Where is the evidence?

What’s the evidence that EcoCash is not customer centric? Well, their user experience sucks. It sucked and then they did an upgrade in November last year and it sucked even more!

Another example? Customers have been asking for an easy way to get statements for a very long time. EcoCash never thought it important to make this a feature even on their mobile app (supposing that USSD is too constrained). Worse: when an entrepreneur developed Ecoledger, an app that made it possible for EcoCash customers to have statements and other pecks, EcoCash tried to tarnish the guy’s name by some unfortunate social media campaign.

Business users of EcoCash have to request a statement whenever they want. In fact, no, not whenever they want! We are one such business that was told that we had requested our statement too frequently at some point. Recently, after emailing the same place we used to get statements, we were told to visit an Econet shop. Meanwhile, EcoCash is running a campaign where they are telling people to stay at home and transact remotely to keep from COVID 19! This is the problem: the business is not inherently designed with the customer at the centre.

This is why merchants are quick to say no to EcoCash. To merchants, if transacting on EcoCash directly is no longer possible and they have to send money to the bank first why should they accept money into EcoCash in the first place? They don’t want to keep begging to get their statement. There are zero tools for businesses. Why? Because Econet is not a builder of products, they are a leverager of network effects and licences.

Why the suspension of agents is affecting EcoCash

Yes the government has suspended mobile money agent transactions but that this has affected EcoCash is EcoCash’s fault. The fact of the matter is that for a long time now whenever a ‘cash-in’ or ‘cash-out’ transaction happened at an agent generally there wasn’t any cash that changed hands except for the few instances where the agents were selling cash. What was happening is that people were ‘hacking’ agent transactions to do business to business, business to consumer and consumer to business transactions.

If EcoCash had a product development culture that should have been a signal to them. They would have designed appropriate tools that served their customers specifically. When you find a big portion of your customers hacking your product to make it more useful it should tell you what to build for them.

Had EcoCash looked at this from a product builder perspective, they would have created new channels that served their customers separately from agent transactions that justifiably raised suspicion with regulators. As far as regulators could see, there were a lot of cash-in and cash-out transactions in an environment where there is no cash! So the authorities banned agent transactions.

This could have been different if business to business, business to consumer and consumer to business tools had been built from the ground up. EcoCash’s attempt at such was introducing what they called bulk payer lines which were not a good product at all because the lines were essentially just agent lines. That is the problem when there is no imagination for product evolution. EcoCash was happy to get their imposed tax for every transaction on their platform without thinking about improving the experience of their users.

What does all this mean?

If the moves by the government are going to affect EcoCash in any way, it’s going to be because EcoCash has not made their customers into fans. Those customers have no reason to keep on the platform if there are no network effects to keep them locked in.

EcoCash is pushing for people to open bank accounts. However, once people have bank accounts, what is the distinct thing that will make them need to move money from those accounts into EcoCash? An agent footprint is no longer a selling point and not because the government banned agents. It’s because agents don’t matter much in a cashless economy.

Right now the more important selling point is the availability of EcoCash even to the smallest merchants. Some of these very small merchants don’t have merchant accounts but use their personal wallets to accept payments. EcoCash needs to quickly build appropriate tools for these users if they want to remain relevant.

The easier thing is for them to focus on the pain of unfair treatment from government (yes it is unfair) and to conclude that it is the source of their woes. However, if they will be humble to realise that they could have preempted this predicament by proper product development and a laser focus on the customer then they can get out of this stronger.

This is not easy though. Culture is the devil.


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42 thoughts on “EcoCash is under threat – gvt to blame BUT underlying problem is EcoCash/Cassava/Econet

  1. The article makes for interesting reading. Econet behaviour is typical of a monopoly. There is little motivation to innovate when competition is virtually non-existent. they were simply influencing a very weak regulatory environment/framework. that they managed to go on for so long having agents in an economy starved of cash is rather telling. to describe gvt’s actions as unfair would be somewhat normative. the whole sector is just a mess at the moment.

    1. there is no monopoly,
      Onemoney and Telecash are there doing nothing

      in business its good to have competition and also its good to kill it too

      1. Whilst the MNO industry is an oligopoly, Econet is virtually a monopoly in the sector and almost calling the shots as it controls 94% of the mobile money market and close to two thirds of the voice and data market.

    2. Hi David

      I still believe the gvt is being unfair. Rather than deal with the real problems leading to the existence of parallel markets they want to pretend the problem is EcoCash. That is wrong.

      However, EcoCash cannot be exonerated. They have ignored their product for far too long and all they have done is to keep it alive so they can milk it

      1. I believe Ecocash is to blame also. The law of Agency does not exonerate them from the diabolical actions of their agents.

  2. “That is the beauty of network effects but that is also the problem. Network effects make customers stick with a business because they can’t leave not because they want to stay. I believe that is the case with EcoCash and Econet in general. Their customers really love to hate them but they feel they need them.” – Absolutely agree! We have little-to-no alternative so we stick with a generally bad product. I think this applies to the whole country though, there is virtually no innovation, customer care or development!

    1. Sadly true that the there isn’t much innovation across the economy. Part of the reason is that businesses and individuals are just in survival mode and they have been in such a mode for a very long time. When you are forced to concentrate on survival your thinking tends to be really short sighted

      1. As a country, we suffer from poor corporate leadership, we have leaders that dont encourage innovation, leaders that feel entitled and not responsible.. Econet has no competition because of poor coporate culture across the sector.

        Poor leaders focus on what the organisation will do for them rather than what they can do for it.

  3. Wonderful piece. So in addition to what has been said about network effects, you find Ecocash was arrogant even to their peers when they sought interoperability. Services such as wallet to wallet across networks would have created a huge web which was going to make the govt bate a bit. And its true, banks have struggled to do pull transactions from the wallet, and that the rails available are just for push makes it even difficult for banks to price innovate around the wallets. This arrogance to peers and partners, in addition to customers as mentioned in the article, has resulted in few sympathizers for them.

    1. Hey, had never thought about pull transactions and the possibility there! Interesting to investigate how the links between EcoCash and banks are structured

    1. And what will happen to all the unbanked? Unfortunately if econet doesnt work then eventually the informal market will not accept any zim dollar thereby killing off the currency quicker than expected.

  4. I bought a netone line 6 weeks ago. I connected once to the Internet since then I’m unable to. No matter what phone and settings. As useless as in the 90s. Customer service cannot help.

  5. Its sad to see this happen because on the one hand, we are killing an innovation that would have served us well had the company at hand, innovated some more. I find it strange that EcoCash did not even see it fit to make their API public to software developers for e-Commerce, maybe I don’t know where the API is, but man it’s a new market also that is now growing and much needed. But now this, all those 10 years and no e-Commerce API that connects easily into popular platforms such as WordPress, Shopify, Magento etc, it was a bad move, they could have received many more. We need a payments platform that can easily integrate with websites other than PayNow. Something that can connect a ZimSwitch card, bank account, and do transactions online easily like Paypal. Since Paypal doesn’t work for eCommerce in Zim.

    Econet’s pride has served them well, now they will have to call all those people they used to turn down and beg to be on their systems. Sad!
    And true now I don’t need EcoCash as much if I have my bank account, and they did hand them a hard one his time. If they don’t act fast and switch their strategy, they will soon become another Nokia. Just there but other innovators now in the game.

    1. They do have an API but yes the right approach would have been to make it publicly available and easy to integrate onto popular platforms like Shopify and Woocommerce

  6. I beg to differ with the analysis. I think Econet is the only company in the telco space driving innovation. If customers hat it so much, how did it grow so big. Yes, here and there they have bully tendencies, but they have served the country well with their services. They even tried to give satellite tv, a failed venture. Naturally, we tend to hate the overachiever and root for the underdog, expected. So the sentiment is well understood. Just out of curiosity though, how would zimbabwe be with 20 more econet style companies, all be it in different spheres. Would it not be a better nation? Food for thought

    1. This is why we are speaking of network effects, they benefited from that and hardly embarked on more innovation to enhance user experience, their platform was not user friendly , it’s like a system that is too buggy and crashes all the time, but because there’s no other viable alternative you continue using the bad App

      1. Make the bug free App yourself. Don’t complain here please. Go to techzim with your product they will write an article for you.

    2. They are big and they have achieved a lot and pushed this country forward: Agreed!

      That doesn’t make them innovators though Mukwende.

      If the country had 20 more of them it would be more than 20 times better because competition would force innovation and customer focus

      1. I like the way you argue Tinashe, in your view, what then are Econets key strengths that grew them in an unpredictable economy, with a government regulating against them as well as competing with them. How have they managed? That would be a discussion that could inform a lot of failing companies.

        I think plle tend to hate on econet without seeing the other side, its like the way i disliked Ferguson.

        Just like every big organization or person, they r good at some things and fail dismally at others.

      2. Whose job is it to create all those other competitive and dynamic organizations that can compete with ecocash and who should create that environment.

  7. Excellent article indeed!!!
    1. Econet / Ecocash acted as though it was invincible and indispensable. The other time Government and ZACC complained about the extortionate cash out premiums charged by its Agents, Econet said they didn’t have control over the Agents and Government must fix the Economy! Well that maybe true and yes indeed the Government must fix the Economy, but the response seemed arrogant and since they didn’t have control over their Agents, Government then asked them to disable what they don’t have control over.

    2. The other time, if my memory serves me well, Government asked Econet to disable the Agent Cash In / Cash Out facility, and there was some Urgent High Court Application, which was later settled outside Court or by consent, but Econet had said that it was not possible to disable the Agent Cash In / Cash Out facility without shutting down the whole Ecocash System! But now the Agent Cash In / Cash Out facility has been disabled, but the other aspects / functions of Ecocash are still operating as usual. This shows Econet’s arrogance where in it held the Government at ransom to wit that if you want us to disable the Agent Cash In / Cash Out facility, we are just going to shut down the entire Ecocash system and you will not only lose the 2% tax from mobile money from our 94% market share, but you are going to have civil unrest and the Government capitulated.

    3. Econet & Ecocash’s ever increasing tariffs aren’t good. Since it it calls the shots, if it increases its tariffs’ every other telecommunications player follows suit. Further, its Ecocash tariff structure should have been configured in such a manner that all charges are paid by the sender, and that the receiver collects their cash without any other charges as is the case with MTAs like Western Union, Mukuru, etc.

    4. Econet is / has always been at the centre of asking its supplier to decrease their prices (if they wanted to be retained on Econet’s Approved Supplier’s List) whilst they are /were ever increasing theirs. This bulling tactic isn’ good.

    5. I have always had a NetOne & an Econet contract line, but around November 2008, Econet moved every post-paid subscriber onto the prepaid system on the flimsy grounds that their billing system was experiencing billing challenges, what lies. I still haven’t forgotten this chicanery by Econet. They wanted easy cash instantly before it was ravaged by inflation. I could have understood the truth rather than the intellectual dishonesty of billing system challenges by Econet.

    6. The Ecocash System frequently hangs after it has deducted your funds, but with no confirmatory SMS to the recipient or to you the sender and getting the funds back, is a nightmare akin to almost to getting a Zimbabwean Passport.

    7. When you call their Customer Care number, be prepared to hold for more than 20 minutes. I just would put my phone on loudspeaker and do other things until they eventually answered around the 28th minute or so. Econet & Ecocash are indeed suffering from diseconomies of scale!

    8. Well, we might blame the Government or accuse it of acting harshly on Ecocash, but I feel Ecocash was also acting as a mini-Reserve Bank and creating electronic money out of thin air that wasn’t matched by actual cash balances received or in the Ecocash Bank account held by Steward Bank or some other bank. Those with the appropriate rights and authority in the Ecocash System can just send whatever amount of money to any Merchant or Agent or even Ecocash number and start wheeling and dealing in forex, etc. As a matter of fact, as Government ponders over bringing sanity to the mobile money sector, Ecocash funds must not be held in Steward Bank and One Money & Telecash funds must not have be in bank accounts in a bank where Government controls or have a significant stake, but a purely private bank to prevent conflict of interest.

    1. I laughed out loud at your comparison of getting your money back to getting a Zimbabwean passport! Clearly you would have written a better article than this one, your metaphors are really visual.

      I agree that Econet is sometimes arrogant. I am not too quick to extend an assumption of sincerity on the part of our government though.

      Your points are well made out and I have to agree with them except Point 8. I think the allegation of EcoCash creating excess money is quite far fetched. I challenge the gvt to come forward with their evidence. That being possible would mean the Mahindra Conviva system upon which EcoCash operates is nothing more than a glorified spreadsheet. I don’t think that’s the case

  8. Before we get to the arrogant Econet and its ecocash i believe a few years back how money got into Ecocash was through cash ins, and fast forward to today. Most of the money was getting into the Ecocash platform through banka which led to its abuse by agents and any one else really who had access to large sums of electronic money. In a country where the regulations regarding money movement are non-existant save for when the government has a bone to chew, anybody can receive a millsion dollar deposit into their bank account then Ecocash and no red flag is raised by the banking institutions and the government comes barking at Econet to me thats BS.
    If Ecocash is guilty of not being able to control their agents or system what about the banking instutions which allowed individuals to move large sums into and out of Ecocash with no consequences, its really much like arresting the money changer in the street without paying attention where the supply of fresh bond notes comes from so all in all Ecocash despite its shortcomings is just on the receiving end of a government that deals with symptoms not the real cause. Turns out it aint that hard blogging thats quite a few paragraphs i put up there, hmm think i might start the next techzim for some healthy competition!

  9. This is a very good article indeed. I bet you won’t hear econet challenging those 15 grounds raised by the government for requesting the closure of the platform just because they know it is true. They were giving agents overdrafts thus increasing money supply and fueling the black market. I’m quite sure they would pay for that if we were in the west. Now the government has them in a corner. I don’t see them contesting anything here. With merchants rejecting ecocash it has become bad money overnight, something the RBZ had calculated very well. I think this is their end.

    1. Thanks Tsokoz for the kind words.
      I am not fully in agreement with you regarding the gvt’s 15 points. I think EcoCash’s fault was to leave their product vulnerable to that kind of suspicion. Quite needless.
      I don’t think this is the end of EcoCash, I don’t think it is by a long shot

  10. Why would the government shutdown down all the agents, who is funding the black market through the ecocash agents or bulk payers, is it that difficult to trace who the perpetrators are. And the writer seems to have a lot of knowledge regarding the issue but why didn’t anyone develop a product that gives ecocash a run for their money and create competition. Lack of innovation is what I see as the challenge and closing ecocash agents will not make any difference as people are still trading on the black market and the country itself is all black. We wait and see if this development Will save the economy.

    1. I am not sure exactly what you are saying. If you read carefully you will realise that I actually don’t think what the gvt is doing is right, not at all. However, if EcoCash had been paying attention they would have made features that people needed and so they would not have been forced to pretend as if they were cashing in or out which raised suspicion in the first place.

  11. It is clear that customers prefer quality service prices and rates that’s Econet got more subscribers than it’s comparator and this is all about their stable network, so if an entity is failing to sustain the network no one will trust them to deal with Money.

    1. very well written article. l have always had a problem with Ecocash’s refusal to intergrate with other service providers such as Zimswitch. Had they issued a Zimswitch debit card they would be no reason for merchants to refuse ecocash as one would just swipe . Serves them good for being arrogant

      1. Thank you for the kind words.

        I do not fault them for refusing to integrate to Zimswitch hey. It was a sound strategic move (from the perspective of their business) because they themselves wanted to be a rival platform. Integrating to Zimswitch would have relegated them to be just a wallet. What I fault them on is then not making sure their platform is attractive and solid beyond just the network effects. I would have wanted to see their product evolving.

        The Zimswitch/EcoCash scenario is like iOS and Android. Apple did very well to maintain an exclusive platform which has made them the most valuable company in the world. They have cemented that with continuous product innovation therefore not merely locking in customers who have made the iOS ecosystem their home but actually making them want to stay and making the switch to iOS very attractive to folks on Android which a good number of them will make once they come into some bit of money…

  12. Thanks for a balanced article, Tinashe. Whilst the EW group has its handicaps, their systems work, I’d say 80% or more of the time. Their competitors have worse ratings, maybe due to government interference etc. However, if EW’s HR recruiting culture remains at “if you’re the best we’ll find/hire you” and customer service remains a side show, there are bigger, unexpected challenges ahead for them. The arrogance has to give way to some virtue.

    1. Yes I think it is a source of handicap that EWZ is fighting against competitors who get sidetracked by ridiculous boardroom squabbles and an uninspired shareholder that is the Zim gvt. This situation probably made EW sleep at the wheel a bit. I hope they can find a way to turn around their culture soon

  13. Econet and ecocash services sucks haaa ini handichadi i think um now pregnant of their services they are f****d ngaivharwe kusare kusina forever

  14. An interesting read. I’ve noticed what I now term the Zimbabwean syndrome. The uncanny ability to poke holes, identify problems, point to the culprit, analyse everything that doesn’t work but without ever having attempted to work on the solution. It’s easier, it makes us look better, it makes us feel better but it does not make the situation better. The only person from the 8 – 10 million or so people in Zimbabwe who saw part of the problem and did something about it was Gideon and we need more of him and less of this commenting and identifying problems and talking about product design when we’ve never designed a product that reaches millions of users in a day. Let’s build the solutions we need and leave the commenting and ranting to other lesser minds.

    1. Oh I believe the commenting and analysing is very good actually. It is what innovators can draw from and use. Every part of the chain matters

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