Exchange rate crisis hits Ecocash

TANYARADZWA NHARI

2022-08-05T07:00:00.0000000Z

2022-08-05T07:00:00.0000000Z

Alpha Media Group

https://alphamedia.pressreader.com/article/281848647365872

LOCAL BUSINESS

ZIMBABWE Stock Exchange-listed technology outfit, Ecocash says its operations have been affected by prolonged high inflation and exchange rate fragilities during the first quarter ended May 31, 2022. The domestic currency has plummeted by 172%, and the technology giant sees the turbulences affecting the business in the coming quarters. “The operating environment in the country continues to be challenging across almost all sectors of the economy with inflation and exchange rate depreciation as twin challenges impacting the business,” Ecocash said. “In the circumstances, the company will accelerate its digital transformation strategy, focus on superior customer experience and cost containment. “During the period under review, significant exchange losses were recorded due to the weakening exchange rate with the local currency depreciating by 172%,” it added. The firm shared its views as Zimbabwe’s annual inflation rate rose to 256% in July, from 191,6% in July, the highest such rate in the region. The Zimbabwean dollar has been depreciating by wide margins on the black market, where it was this week trading at about US$1: ZW$850, after kicking off the year at about US$1:ZW$280. These pressures have compounded a crisis that has been holding back business for over two years. However, Ecocash reported significant resilience, with growth across its units. “The group witnessed a modest increase of 2% in volumes compared to the previous quarter driven by the FinTech business segment which remains the highest contributor to revenues,” Ecocash said. “Management continues to adapt business units’ operating models to both grow and diversify sources of revenue.” The firm added a domestic money transfer during the period, helping the domestic market transmit foreign currency across provinces. It said the impact of the investment would come in the coming quarters. However, Ecocash said it reported a 38% growth in wallet funding on its mobile money transfer business after registering higher demand. “The mobile money business also saw a 3% growth in transaction volumes when compared to the prior quarter due to an increase in customer activity,” it said. “The mobile money business is expected to continuously improve its performance going forward driven by new innovations, product bundling within the group and promotions to drive mobile payments.” Ecocash said its banking business, Steward Bank, continued to leverage on investment in technology, to deliver tailor-made solutions. It said Steward Bank’s interestearning assets portfolio grew by 3% during the period, compared to the last quarter after a surge in deposits. Steward Bank launched its foreign currency account (FCA) on Square during the period. The innovation digitises all FCA related transactions on Mobile App, allowing customers to transact through their phones. The firm said the outlook will continue to be affected by the economic crisis. “The group’s performance will remain constrained by the deteriorating operating environment,” Ecocash said. “We will continue to leverage on our digital platforms to innovate and meet the changing needs of our customers. We believe that we have the right products, strategies, and team to ensure that the business can weather the current challenges and emerge stronger as the economy recovers in future.”

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