In a perfect case of when life gives you lemon you make lemonade, Zimbabwe appears to be a country that others may want to emulate regarding advancing mobile money adoption because latest figures released indicated that the citizens are quickly adopting mobile money which is quite unexpected for a where being a millionaire actually means you are very poor.
Zimbabwe probably has the worst currency in the world as the cheapest things elsewhere cost millions and billions of Zimbabwean dollars thus making many bulky transactions to be done in US Dollars. For those that still use the local currency, they have to pay so much for few things and the demand for currency notes is quite understandable.
Let me paint a picture. Today, 1 USD = 361,900 ZWD according to XE.com
Now imagine you trying to buy the 2016 Toyota Corolla LE whose price is from USD18,735. That means you will be coughing out about 7 billion Zimbabwean dollars. How do you carry that kind of money around? How many bullion vans would be needed to convey it from your house to the bank or from one bank to another? Consider the fact that you can put USD20,000 in your pocket and no one will suspect you have that large sum of money on you. This is the dilemma in Zimbabwe and those that wants to buy stuffs are now experiencing currency notes shortage and people are looking for easier, safer, quicker and better ways of handling currencies. The best option that benefits everyone is going cashless. And the impact is already being felt as the volume of cashless transactions in the country is soaring.
The figures
The government is aggressively championing cashless transactions as an avenue to address cash shortages in the country. There are increasing users of point of sale (POS) and mobile money platforms such as Econet’s EcoCash, Telecel’s Telecash, NetOne’s One Wallet and GetCash. According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) first quarter report, there were 3,2 million active mobile money subscribers.
Out of the 3 199 568 mobile money subscribers, Econet had 3 121 683 active subscribers, Telecel had 64 905 and NetOne had 12 980. The Potraz report showed that Econet had the lion’s share of the market at 97,5%.
In the period under review, mobile money transactions for cash-in handled $449,8 million, cash-out transactions $407,3 million and cross network transactions reached $1,5 million.
The difference between the cash-in transactions and the summation of cash-out transactions and cross network transfers implies that about $40 million was used for other transactions such as merchant payments, bill payments and airtime top-up amongst others.
Product case study – EcoCash
EcoCash appears to be the top gainer and major force in the mobile money ecosystem. It is able to achieve this feat by leveraging on its status as the country’s biggest network to push its mobile money service to more users than other operators – a development that Lovemore Nyatsine, executive assistant to Econet’s group chief executive officer Douglas Mboweni said had made EcoCash to become the country’s premier mobile payment system as customers embraced the convenience and efficiency of the service.
Nyatsine noted that the growth of EcoCash was agent and demand-driven and to date had more than 26 000 agents to cater for customers across the country.
“The current cash challenges have presented an opportunity to promote a cashless society, both in formal and informal sectors. We therefore continue to invest in the appropriate technologies that lessen the reliance on cash for day-to-day transactions,” he said.
“These include POS machines and other electronic platforms. In addition, we are in aggressive partnership negotiations with local companies and retailers who also see the benefit of using EcoCash as merchants. We have zero rated merchant payments as well to ensure payments go via the merchant route. This zero rated campaign is running for 90 days,” Nyatsine said.
Transaction patterns
According to him, mobile money transactions often peak during the periods that salaries are paid. For a service that is majorly driven by civil servants, there should be concerns and actions on how to get users in other spaces especially the informal sector where people that are outside the formal banking sector are largely found.
EcoCash is growing to be a mode of transaction for day to day business activities both in formal and informal sectors,” he said.
For Potraz, the total number of registered mobile money subscribers increased by 9,9% to 8,1 million as at March 31, 2016 from 7,3 million recorded in the previous quarter. In the period under review, of the total registered subscriptions, 39,7% were active, 3,2 million subscribers had used mobile money services to send or receive money, purchase airtime or to make payments. This implied that 60,3% subscribers were inactive.
3 important lessons for Africa
The first lesson is bad currencies mean potentially great business for cashless payment solutions. When more currency notes are needed to make payment, the Zimbabwe example indicated that people will consider other means that don’t put them at great risk of being robbed or famished from counting currency notes.
The Zimbabwe’s mobile money success story also indicate that big operators have the biggest opportunity to dominate the market. Since the telecoms operators already have millions of customers on their network that can be made to know about – and start using their products. This is however an issue that many operators in many African markets are yet to figure out – how to convert their mobile subscribers to mobile money users.
Thirdly, The online battle is best won offline. Many operators claim they offer mobile money services and that their agents are nationwide – yet it is almost impossible to see those agents. In countries where mobile money works, agents are everywhere and individuals know who they are in their local communities.
Few years ago, I visited Kumasi in Ghana and I was really impressed at how mobile money agents operate. They are the people selling airtime and, basically, they are not just selling airtime, you can also get money transferred to you from them. This is not yet the case in Nigeria and other countries struggling to take mobile money to the mainstream.
If there is any lesson that the impressive state of mobile money and the rise of cashless transactions in Zimbabwe had taught us, it is the fact that when there is a a problem, people seek solutions that are easily accessible. If it is working in Harare, it can work elsewhere.
