There’s not a whole lot that we are promised on this earth but we have assurances that the multicurrency regime will be in place until 2030. You will have to decide if you believe the Zimbabwean govt will honour its word.
We all know that multicurrency means USD and that the economy has more or less dollarised. Meaning it will take a lot to wean us off the USD.
Usage of the USD in the economy is mostly on a cash basis. If it can be helped, USD transactions will be in cash. It’s all understandable really, we banked our USD before and woke up to find it converted to an inferior currency at a terrible exchange rate.
With this in mind, you would think financial service providers would not be interested in trying to lure us to bank our USD. However, the battle for our USD seems to be intensifying. Which makes one wonder, what do these financial service providers know? What has them confident?
O’mari
Last week we talked about the O’mari For Mahala promotion where they are offering zero charges on certain transactions. All in an effort to steal away customers who would appreciate saving a buck here and there.
According to the O’mari guys, this is working. They can’t get into numbers for now but they are gaining serious traction.
MyCash
MyCash is running its own promotion – free USD transfers to any unregistered number.
By making it free to send money to unregistered users, MyCash is hoping the users they have already signed up will make it known to their unregistered friends.
Normally, sending to unregistered users attracts a fee. Making it free will nudge users to use the feature.
These promotions only apply to the USD wallet. These guys don’t really want your ZW$ and it shows.
EcoCash
What I find interesting is EcoCash’s relative inactivity on this. These new guys, InnBucks included, are coming up to eat EcoCash’s cake and they seem fine with it.
I did talk to some guys in the EcoCash back offices and gathered that they indeed do not believe the future is in domestic remittance.
They straight up told me that they are not worried about InnBucks or those other guys because they are fighting to capture a cake that’s rotting from within. That’s how I’d paraphrase what they said.
To clarify, this is not the organisation’s official position, but apparently, a good number of their employees do believe this and EcoCash’s contentment with new players coming in shows that’s true.
If not domestic remittance, then what?
InnBucks
International remittance of course. InnBucks is now a proper bank, it might be microfinance for now but we keep hearing that they have much bigger ambitions for it.
InnBucks is giving out loans and that interest income might prove to be a good revenue stream going forward. Especially when they finally launch their commercial bank.
InnBucks has also set its eyes on international remittance. You all saw how aggressively they pushed their ‘Send Money Home’ service over the holidays. Targeting Zimbabweans in South Africa mostly.
When you remember that Zimbabwe received $919 million in diaspora remittances in the first six months of 2023, you instantly get why these players are all angling for a piece of that juicy pie.
Do note that the $919 million figure is indeed just for diaspora remittances, i.e. money sent by our families living abroad. It does not include payments received on behalf of international non-governmental organisations. Those contributed their own $516m in that half-year.
As you know, not all money sent to Zimbabwe comes through the formal channels and so there is a huge amount coming into the country in suitcases and under car seats that is not captured there.
So, you can just imagine how big this diaspora remittance pie is if some of those transfers can be channeled to formal channels.
I would argue informal remittances were worth at least $100m, which would mean over a billion USD was remitted in the first six months of 2023. One can only conclude that the second half of the year which has the distinct honour of hosting Christmas see more remittances.
So why fight for our local USD transfers?
Why are some players fighting to gain market share if currency uncertainty means the USD will never be banked to a degree that can support this many players? On top of it all, there are limits on how much people can utilise their mobile wallets.
These guys have ambitions beyond just domestic transfers. So, even if that doesn’t prove to be sustainable in the long term, it doesn’t matter, it’s merely a stepping stone.
I know the O’mari guys see their service becoming more of a platform and that’s what they are working towards. So, domestic remittance is just one other avenue to get users for the eventual platform.
InnBucks’ ambitions are a public secret by now, they intend to disrupt commercial banking. Loyalty rewards morphed into domestic remittance, then microfinance activities, international remittance and who knows what else as their story unravels.
They have been aggressively recruiting agents as you may have noticed. That’s interesting, isn’t it?
The future
Then there is EcoCash, the OG. It’s not immediately clear what the future holds for them. They have been in the space for so long and already have an agent network (dwindling as it is), customers, international remittance services and a lot of what these other guys are fighting towards.
So, it could be that EcoCash appears quieter in comparison because they made their noise already. However, the fact remains, no one outside the company knows what exactly EcoCash will focus on going forward.
I also think it’s not wise to look at their customer base and be content with that. See, most Zimbos who are signing up for these new services do not then go on to deactivate their EcoCash accounts. Most of us just sign up for the new ones and will pick and choose what to use as we go.
So, whatever ambitions EcoCash has will be undone if they end up losing customers. These customers will remain on paper but will keep utilising those other services most times.
It may seem unthinkable but if I had a dollar for every time an unsatisfied EcoCash customer complained about the agent situation, I’d be as rich as Strive Masiyiwa.
Anyway, this is one battle that’s going to be interesting to watch. There are other players in the field that I didn’t even talk about. All looking to get a bite.
So, to my original question, are these guys confident that we will bank and transfer our USD domestically using their services? Not necessarily. They are all looking to use domestic remittance as a catapult for their other services.
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What’s your take?