INTRODUCTION
The Group continued to focus on innovation and deployment of digital solutions to drive its strategy of meeting the ever-changing customer needs. The operating environment remains challenging but, we continue to leverage on our wide product base and digital solutions for the convenience of our customers.
OPERATIONS REVIEW
Mobile Money Services
We introduced the EcoCash United States Dollar (USD) wallet during the year as we consolidated our participation in the USD economy which, according to official reports as of January 2023, accounted for 76% of expenditure. We are encouraged by the growth in customers, volume and value transacted. The reduction of Intermediated Money Transfer Tax (IMTT) on USD domestic money transfer transactions from 4% to 2% effective 1 January 2023, has helped in the adoption and use of USD on digital money transfer services. We are continuously improving access and convenience for our customers by growing our distribution footprint across the country.
We launched the EcoCash Junior wallet, a mobile wallet for children between the ages of 9 and 18, aimed at improving financial literacy and financial inclusion. This product is experiencing steady growth and will be key in the growth of our subscriber base in the future. Over the period, we launched the EcoCash Chatbot, an Artificial Intelligence (AI) powered virtual assistant that handles customer service queries. To date, this AI powered virtual assistant has provided services to over 381,000 customers. We also launched Bill Manager, an integrated bill payments platform for all major billers. Bill Manager has helped to improve our customers’ experience and real time account settlement to regular billers through EcoCash. We have integrated with local municipalities, insurance players for premium collections, universities, credit stores, retailers and utilities. This is part of our plan to implement digital solutions to enhance our value proposition, reduce customer pain points, and improve financial inclusion.
Banking Services
Steward Bank has continued to grow its USD interest earning assets particularly in the corporate sector. This was coupled with an increase in FCA accounts which grew by 34%. Our bank moved to capture a share of the growing domestic and international remittance market with the opening of The Eastgate Remittance Centre, a dedicated remittance facility for our customers to access funds sent to them from within and outside of Zimbabwe. The bank is now focused on phase 2 of our digital transformation journey which will see increased automation of systems and processes as well as enhanced capacity to launch innovative products. We are also expanding our Point-Of-Sale (POS) network through the deployment of multicurrency POS solutions to our merchant partners nationwide.
Insurtech Services
In our life insurance business, EcoSure, we have also continued to innovate and add new value adding products to remain relevant to our customers in the fast-changing operating climate. During the year, we launched the ‘Dura Pension Scheme’, aimed at the informal sector to ensure broad-based inclusion of all workers in retirement planning. We also launched ‘Data Life Cover’, a new product that allows customers to get funeral cover as they purchase Econet data products. Bundled services with strategic partners will be key in driving growth in the future. The adoption of the USD packages has allowed the business to enhance life cover through assured USD benefits.
Moovah, the short-term insurance business, embarked on a distribution network expansion project which to date has seen the business expanding to over 250 locations. This has further improved access and convenience for our customers across the country. We are happy with the improvements in the claims process and overall service delivery as evidenced by growth in total policyholders.
Through the health insurance business, Maisha Health Fund, we launched a micro insurance product, MaishaCare, an affordable healthcare package for those that previously had no health cover. The product is riding on digital rails to onboard customers, with no requirement to complete physical forms.
Other Business Segments
Our digital platforms business, Vaya Technologies, continues to focus on and drive the anchor units in Healthtech, Agritech and On Demand Services. We continue to develop and refine our products in these sectors to fully harness and realize the potential we see in them. As we progress into the next year and beyond, we believe we will be able to increase contribution from these emergent businesses to the broader EcoCash Holdings Group performance.
FINANCIAL PERFORMANCE
The financial review is based on inflation adjusted financial statements which are the primary financial statements. Historical cost financial statements have been presented as supplementary information. In order to comply with International Financial Reporting Standard 29 – “Financial Reporting in Hyperinflationary Economies” in the preparation of its consolidated financial statements, the Group estimated and applied Inflation Rates for February 2023 based on the Total Consumption Poverty Line published by ZIMSTAT. The estimation of the consumer price index is permitted by IAS 29 where a general consumer price index is not readily available. The Directors caution users of the financial statements on the usefulness of these reported financial statements, considering distortions that arise when reporting in a hyperinflationary economy.
EcoCash Holdings recorded revenue of ZWL101.3 billionfor the period, compared to ZWL 96.8 billion in FY22, a 5% increase from prior year. Whilst the regulatory restrictive limits on the Mobile Money business, as well as the general cash economy on the USD transactions put pressure on the revenue numbers, significant growth has been noted in transaction volumes and values following the reduction in IMTT from 4% to 2% in January 2023. 78% of our revenue was driven by the Fintech business followed by Insurtech at 17% and lastly Digital Platforms at 5%, in line with the prior year’s performance. The Group achieved an EBITDA margin of 7% against 18% in the prior year mainly due to the pressure on costs due to the prevailing operating environment. The exchange losses related to the debentures amounted to USD 30.1 billion for the year under review.
The Board initiated a capital raising process to facilitate redemption of the Company’s debentures which matured at the end of April 2023. A Renounceable rights offer of USD 30.3 million of new ordinary shares in the Capital of the Company is under consideration.
The business has competing needs for the limited foreign currency generated by the Company with priority being given to the financing of the upgrade and maintenance of the digital platforms in use by the Group.
As the Company is unable to secure foreign currency for purposes of redeeming the debentures from the auction, the only available option is to raise the required foreign currency from members through the renounceable rights offer.
DIVIDEND DECLARATION
Given the challenging operating environment, the need to conserve capital to support the business recovery efforts and redemption of the Company’s debentures, the Directors do not recommend declaration of a dividend for the period under review.
SUSTAINABILITY
EcoCash Holdings is dedicated and committed to enhance the positive development of the communities in which we operate. Through community investment focused on three pillars, education; global health; and rural transformation and sustainable livelihoods, the Group seeks to improve the quality of life for the financially excluded and the vulnerable members in our communities. Through our sustainability implementation partners, Higherlife Foundation, we continue to invest in improving the quality of education by providing training programs for educators. As part of efforts to strengthen early childhood development and improve the quality of education for foundation phase learners, we provided literacy and numeracy training to more than 1,300 foundation phase educators across the ten provinces in Zimbabwe. More than 3,400 educators were trained on foundational learning methodologies, positively impacting 173,600 students.
Higherlife Foundation, working closely with the Ministry of Health and Child Welfare, is the implementation partner for key projects dealing in the areas of Maternal & Neonatal Health, Neglected Tropical Diseases, Cholera Elimination, and Disaster Relief and Preparedness under the Global Health Program. Interventions have included technical support, training and provision and maintenance of hospital equipment. Following the placement of critical care equipment in 16 hospitals and the training of maternal health staff in Zimbabwe in prior periods, the year was focused on strengthening the equipment maintenance and systems. To achieve this, technicians were assigned to different hospitals for efficient equipment monitoring and maintenance. Census results indicated a marked decline in maternal and neonatal mortality rates.
Our long-term sustainability is built on strong Environmental, Social and Governance risk management methodology, regulatory compliance, and ethical conduct. The business has adopted the revised Global Reporting Initiative (GRI) sustainability reporting standards that establish a high level of openness for effects on the economy, environment, and people. These changes make reporting more pertinent and consistent, with the full alignment with intergovernmental instruments, as stated by the UN and Organisation for Economic Co-operation and Development (OECD), for due diligence on sustainability impacts, including those on human rights.
BUSINESS OUTLOOK
While the business environment remains challenging, the Group is committed to delivering value to all its stakeholders. In line with our growth ambitions, we are actively looking at scaling our various businesses, enhancing the product offering and diversification of our products. The Group continues to scout the local and regional markets for strategic opportunities which complement our vision of a digitally connected future that leaves no Zimbabwean behind.
APPRECIATION
On behalf of the Board, I wish to express my sincere gratitude and appreciation to our customers, business partners, and our valued shareholders for their confidence in us.
I would also like to extend my gratitude to the EcoCash Holdings staff, management, executive team and my fellow Directors for their passion, commitment, and dedication to achieving a high-performance and innovative culture in our business.
Finally, to our regulators and the various governmental authorities with whom we continuously consult, I would like to say that we greatly appreciate their support and willingness to engage with us.
On behalf of the Board
Sherree Shereni
BOARD CHAIRPERSON
30 May 2023
