Cassava Smartech has released its financial statement for a six month period that ended in August 2020. The Group recorded a revenue decline of 34%, ZWL$5.4 billion for the six months ending 31 August 2020. In comparison, the group were able to rake in ZWL$8.2 billion over the same period in 2019.
EcoCash’s revenue contribution to Cassava took a tumble
EcoCash has been fighting an all-out war against the RBZ and the government in general. This is because the mobile money operator has been the scapegoat for the spiralling exchange rate pre-Forex Auction introduction.
The MNO has had regulation after regulation put on it in order to limit it’s activity. The most recent being:
- The outright ban of EcoCash Agent Lines
- Individuals being allowed only one mobile money wallet
- ZimSwitch assuming the role of the national switch
- The ZWL$5000 daily transaction limit which was upped to ZWL$35 000 a week
The above as well as the depressed volumes of trade because of the lockdown measures that were prevelent over the period under review drastically reduced the amount of transactions processed.
EcoCash’s contribution to Cassava’s revenue fell to 63% in the period under review which is a 10% decline from the 73% that was registered over the same period in 2019.
Cassava Fintech as whole
The contribution by the Fintech units as a whole (which includes EcoCash, Steward’s Digital Banking, Remittances and Payment Services) decreased but Cassava says this is in line with its revenue diversification strategy.
The strategy has, according to Cassava, started to bear fruit with revenue growth in Insuretech and the Digital-On-Demand Servies business units.
Exchange rate losses
This continues to be a big problem for Cassava Smartech. The amount for the six months ending August 31st 2020 is ZWL$2.4 billion. Foreign liabilities at the end of the period under review totalled US$40.1 million of which US$31.4 million comprised of Cassava’s obligation with respect to the debentures issued by Econet Wireless Zimbabwe Limited prior to their uncoupling in 2018.
Thoughts
EcoCash’s contribution took a little less of a decline that I imagined it would. The mobile money service had a rough time towards the end of the period covered by the financial statement. EcoCash has however bounced back in some ways with their rewards program, the first wave of it was successful judging by the good and bad chatter it got online.
The extension of this program to remittances might have a positive impact on Cassava’s financials. It will be interesting to see what impact the measures EcoCash put in place in Q3 2020 will have on Cassava when the next report comes out.
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