How Mobile Money Saved Zimbabwe

EcoCash is the financial technology service of Econet Wireless, the largest mobile operator in Zimbabwe.  Launched in 2011, today the service covers close to 80% of the adult population in the country, allowing a range of financial transactions to be completed directly from a mobile phone.  Moreover, it has helped Zimbabwe to maintain a functioning market economy in spite of a severe shortage of paper currency.

In 2009 Zimbabwe adopted the U.S. dollar as its official currency in order to control hyper-inflation.  Since then, inflation has decreased but scarcity of dollars due to economic and political problems has constrained the economy.  Zimbabwe’s foreign reserves ended 2018 at only $200 million. 

EcoCash has contributed enormously to the economy by enabling cashless transactions while banks have no cash as the Reserve Bank of Zimbabwe (RBZ) prefers to use its scarce dollars to honor essential international payments. RBZ’s decision is focused on maintaining Zimbabwe’s international trade rather than supplying dollars for domestic circulation.  Central bank governor John Mangudya made it clear: “We need to use our foreign currency for foreign payments, for our trade, not for domestic payments.”

EcoCash has become a cash-cow for Econet Wireless, a well-run mobile operator owned by Zimbabwean billionaire Strive Masiyiwa, valued at $5.6 billion. EcoCash accounted last year for 30% of the wireless operator’s revenue. EcoCash has 97.2% of market share in mobile financial services in Zimbabwe, according to telecom regulator POTRAZ.  Econet acquired TN Bank in 2013 and rebranded it as Steward Bank, peering it with EcoCash and getting under RBZ oversight. Econet increased fintech revenue from $130 million in 2017 to $244 million in 2018, an almost 87.7% jump. This increase in fintech revenue was largely driven by a 19% increase in EcoCash subscribers (now over 8 million), a large increase in transaction values, and the addition of 27,000 new merchants trading in the platform (117% increase year-over-year). The introduction of “bank to mobile wallet” transfers spurred the use of mobile money for effecting payment transactions.  This is reflected in the large increases seen in airtime, bill and merchant payments using mobile money.

Mobile finance has also helped Zimbabwe receive foreign exchange by facilitating remittances. EcoCash has processed $300 million in remittances since 2011.

In its latest Monetary Policy Statement, the Reserve Bank of Zimbabwe (RBZ) showed that mobile payments accounted for about US$18 billion in 2017 (three times more than in 2016), or over 18% of the total of $97.5 billion payments in the country. There were about 754.7 million mobile transactions in 2017, up from 298.5 million in 2016.

While the government initially resisted mobile money, that changed dramatically with the realization that fintech could save the economy in a hard period.  Former Finance Minister Patrick Chinamasa said last year: “I don’t know what we would’ve done without EcoCash. It saved us.”

Mobile operators looking into new revenue streams should study Econet Group.  It leads its domestic market in fintech while also running Johannesburg-based Liquid Telecom, a fiber company which is now the largest in Africa, rapidly expanding across the region.   It also runs a creative pay-TV pre-paid service and a digital affiliate.  Leveraging its control of 70% of total telecom revenue in Zimbabwe, the group has become a regional force.