Ecocash Loans- Game changer ? Opportunity or Threat ? For whom

With the launch today of Ecocash Loans, following in quick succession from Ecocash Save accounts, Econet wireless has yet again read from the M-Pesa script to be the dominant financial services provider in Zimbabwe.

Ecocash is a bank, with the largest number of customers at 3.5M registered users. Having shaken up the financial services market and largely to reach the unbanked, sectors in the micro-finance are now jittery, they have come to eat their cake too. Banks have been the traditional threat to microfinance targeting the same customers, that today has changed with Ecocash entry into the lending space.

In the last 6 years M-Pesa has revolutionized banking in Kenya, with the 70,000 easy set-up branches( that you call agents) and with a total of 17m customers is the largest bank in Kenya and Africa. Holding close to a billion dollars in monthly deposits, controlling the mobile money transfer market with a billion dollars transferred monthly in peer to peer transfers, and in the last two years have diversified into savings and lendings.

The product that Ecocash Loan mirrors, M-Shwari had more than 350,000 micro loans within the first four months of launch. 60% of Kenya’s population is between 15-35years.To them, convenience is a lifestyle and mobile is their primary device; mobile banking has become a mass market service within a short period of time. 75% of M-shwari customers are 18-35years. They are accustomed to interacting with every sector of the economy via mobile.

How does this compare to Zimbabwe ?

With among highest penetration rates in the region, Zimbabwe’s telecom sector has outdone Kenya’s in terms of reach.

While I like to think that the markets are similar, a key difference in the markets has been the approach that Safaricom took. Safaricom opened up its platform massively for business. Any and every business can virtually acquire a mobile service within two to three weeks. The VAS aggregation space is regulated by the Communications Commission of Kenya(CCK) resulting in nearly 100-150 VAS players in the market, all service dynamic segments.

Mobile services are launched in a short window of time ( 2-3 month deployments) and virtually every sector is covered, from Financial services, Manufacturing, Transport, Education , Health, Agriculture, FCMG , just to name a few. Every sector of the economy has one or two key mobile services running with industry leaders having iterated two to three services in the last three – six years. You could call it a very hotly contested market. One in which Econet wireless failed to penetrate.

Cement Manufacturers have mobile codes for retail and distribution, pharmaceuticals have services for drug authentication, m-health, education services launched on SMS to manage training, Apps for agriculture, solutions for transport, mobile banking for Saccos and microfinance not just banks. Not to mention the digital content space with local content as a key commodity for players. We are talking mobile services that tell you when your cows should mate!

I postulate, and this is just my opinion, in their approach Safaricom, enabled innovation by allowing VAS aggregators access to services, and in that way, ensured their customer base was served in virtually every sector. Its not just allowing access, but maintaining a standard operating procedure for VAS players to connect services. Now it didn’t come easy, and Safaricom has often been described as a “market bully” or monopoly, but in my experience with Econet, they are a benevolent dictator. They set the terms, they set the rules, but the field is open for you to play. It’s your focus, commitment and  resourcefulness in this crowded market that will get you ahead, the operator doesn’t really get in the way of your business or the basic access to service.

 I think Safaricom has come to a place where they realize they don’t hold a monopoly on innovation, it will happen, they just need to get out of the way, take a cut, it contributes at least 4-6% of their total revenues.

Lets take look at Econet wireless.

Their story is an inspiration for Africa by many accounts having overcome the greatest of odds, from last entry in the market, to complete and utter dominance of the telecommunications sector in Zimbabwe. They are ruthlessly focused, efficient, and have managed to lead the sector in what I estimate this year will be billion dollar revenues.

Ecocash wallet has quickly acquired more customers than the total banked population in less than two years and their launch of service happens in a quick succession of 2-3 months for new products.

What about the market?

With no formal regulation of VAS/WASPA providers, it’s entirely up to the operator as to whom they choose to work with, how and when. No accurate processes to determine if and when they will take on new ventures, its more akin to lining up several suitors for one fat bride, there are always likely to be losers, never a level playing field. Not to be accused of ranting against Econet,  all operators work in this manner in Zimbabwe. Each has a preferred set or just one VAS player connected into their platform, reducing the likelihood of service deployments on unified shortcodes.

How many shortcodes for VAS ? Limited to News alerts, basic SMS subscriptions and operator dominated services. How many VAS players of note, less than 20. In fact the word aggregator, will get doors closed in your face.

How many microfinance institutions have mobile services ? your guess is as good as mine. How many manufacturers can deliver solutions for distribution within 2-3 months ? FMCG ? None. For a forward thinking market such as Zimbabwe why would top FMCG promotions run on WhatsApp! For banks the acquisition and roll-out of mobile banking solutions in the market has been painful, and often fragmented.

Econet will continue to dominate the market, that is not in doubt. In fact, we all want to be like Econet in a downturn economy like this. But will they deliver the level of innovation that this economy needs to break the downturn, not by a longshot. Innovation cannot be monopolized. If anything they should lead the call for a formalized VAS/WASP regulation, and open up the pipes. Not to be relegated into dumb pipes, but to participate in opening up opportunities that other business segments can build and grow on. Because their future depends on it.

They might read from the Safaricom script, but they are far from being a game changer for this market. The co-operative and collaborative model that impacts businesses and the economy at large does not exist.

East Africa leads the way in mobile payments

Got this from Kopo Kopo blog, haven’t blogged yet this year, thought its a good one to start of the new year.

East Africa is definitely leading the pay in the digital payments space, revolutionising how payments are done using mobile. As they say tell, an African that money is sitting on that little sim card, he’ll figure out how to get it out …..

2013 was definitely the year that global payments systems upped their stake in East Africa. 




Ecocash on par with MPESA


Snapped this goodie from Mobile money news, an interesting piece if i do say so myself:


Zimbabwe: Predictions On Econet, Ecocash Fulfilled

BY BRETT CHULU- Zim Independent( local weekly)

WE made two predictions about Econet’s share price and about the size of revenues EcoCash would generate.We were spot on.

 This article will refresh our readers on the predictions we made in this column on Econet’s share price and Ecocash’s revenue-generation capacity. Readers of this column include local and foreign respected business leaders and business analysts.

 The whole point of this article is to drive home an unusual point; a model can be more powerful than data. If a business leader waits until the data is clear, the game will be over. This is a lesson that our business leaders in Zimbabwe should take seriously. In short, in a world of fast-paced changes they cannot wait until the data confirms their hunches -it will be too late. Opportunities will be gone by the time data is clear.

Econet share price

 In this column, on October 12 last year, that is 13 months ago, I wrote: “From the statistical relationships we derived from the model (a mathematical model I had prepared), we extrapolated to a number of firms not sampled, Econet is a very notable anomaly. From the parameters established from our model, Econet should be trading at around 676US cents per share, based on last year’s earnings performance. At the current share price of 475 US cents, our model shows that Econet is at least 42% undervalued.”

 You can imagine my delight on Monday February 25 2013, five months later when the Econet share traded at 676,60 US cents, practically, the exact share price we had argued was the right level five months earlier. The Econet share price continues to trade above 600 US cents. If someone who read our article of October 12 2012 had bought our argument and purchased Econet shares, they stood to grow the value of their investment by 42% in a space of five months.

 EcoCash revenue

 Until last week, Econet had not released the revenue figures for EcoCash since it was launched in 2011. Econet revealed in its analysts’ briefing of the half-year results that EcoCash had raked in US$13 million. I had predicted this revenue level, as far as 17 months back. No insider information, please. Simple mathematical modelling did the trick. On June 22 2012, I wrote an article titled “Can EcoCash match M-pesa?. This article attempted to use what is known about M-pesa, the mobile money service operated by Kenya’s Safaricom to predict the financial performance of EcoCash. At the time of writing, EcoCash was barely 9 months old. One of Econet’s senior executives went on record to state that it was too early to gauge the performance of EcoCash. The executive went on to mention that it normally took five years for performance patterns in mobile money to be established. I could not wait for five years and so I decided to use M-pesa to establish a model to make sense of how other mobile money services were likely to perform operationally and financially.

 In the June 22 2012 article I wrote: “Analysing M-Pesa’s revenue-generation per M-Pesa subscriber shows that average annual revenue per M-Pesa subscriber has risen to US$13,00. This is a key metric that gives us a glimpse into the revenue generating capabilities of mobile money transfer over time.”

 I had expected Econet to release EcoCash’s revenue at the end of the 2012/2013 financial year. Frustrated, I decided to do some digging into its published numbers. Armed with the US$13,00 per registered M-pesa subscriber I had extracted from the M-pesa’s five year evolution, I placed this as a ceiling for EcoCash.

 After being disappointed by absence of EcoCash’s revenue figures in the 2012/2013 Econet report, I did a write up on October 31 (never published) on my thoughts on EcoCash’s performance. Here is an extract of what I wrote then (quoted verbatim):

 “From the analysis of Econet’s full year 2013 financial results, EcoCash is not generating much.

 “Data, SMS full; year 2010/2011 contributed US$64,09m (EcoCash was launched at the end of the 3rd quarter during this financial year).

 “Data, SMS, EcoCash; full year 2011/12 contributed US$85,54 million.

  “Data, SMS, EcoCash; Full Year 2012/2013 contributed US$90,35 million.

 Taking the growth in data and SMS from the year EcoCash was launched, there has been a growth of US$26,26 million. At US$1,2 billion transactions since launch, it means, EcoCash is processing an average of US$80 million worth of transactions per month. If we take a modal tariff rate of 3%, based on the assumption that most EcoCash users are registered subscribers then, EcoCash is generating about US$28,8 million per year, about 4% of its total revenue. A similar mobile transfer service, M-pesa, Kenya’s largest mobile network operator, is contributing 18% to total income. Does this indicate the scope for revenue growth from EcoCash? Using annual revenue per registered EcoCash user, we get an average of US$13,71.

 M-pesa’s is in the US$13,00 -15 average revenue per M-pesa subscriber.”I had predicted US$28,8 million EcoCash revenue for a full 12 months. Halving that gives us US$14,4 million, which is not far from the US$13 million Roy Chimanikire, the group chief financial officer for Econet Wireless Zimbabwe revealed in his presentation two weeks ago. Our US$28,8 million was based on an EcoCash subscriber base of 2,1 million customers.

 Now that EcoCash’s subscribership has since risen to 3 million, the EcoCash revenue for the current full year is likely to be about US$35 million.

It would appear that the model for mobile money transfers we derived from M-pesa’s first five years of operation is a good predictor of the performance of similar mobile money transfers.

The business of death

Stumbled on this piece of news today, and thought it was very interesting. I had not come across the funeral assurance business as big business, until i moved to ZIM. This has not been widely adopted in the EA, region, in my view because of our cultural collectivism.  We contribute towards our families and friends big events, the  “harambee spirit”….

All in all, i see a big opportunity for this in the mobile space, insurance premium collection via mobile banking and mobile money wallets will be the next logical spae as adoption of such insurance services takes root.Read on…

JOHANNESBURG/NAIROBI — From fish-shaped coffins to slaughtered bulls, funerals in Africa are lavish affairs, providing a lucrative opportunity for insurance companies looking for business in some of the world’s fastest growing economies.

Many of the insurance industry’s big money-spinners in developed markets, like car insurance and coverage for household goods, are irrelevant to the majority of Africans who can’t afford a range of expensive personal possessions.

But high death rates and low savings levels mean funeral insurance is proving an easier sell among people daunted by ceremonies that can cost several months’ worth of income.

Related gallery: The funeral business in Africa: Not a dying industry

“That’s the whole problem with it. People think that if you want a small intimate funeral, you don’t have money,” said Emily Chauke, a 43-year-old cosmetics consultant from Johannesburg who pays 570 rand ($57) a month for family funeral coverage.

“They have that thing of proving people wrong, that ‘I can afford to give my father or mother a big funeral,'” she said.

Africans are by no means alone in spending heavily on honoring their dead. But funerals on the continent are more frequent per head of population than elsewhere in the world.

In South Africa, the continent’s biggest economy, the death rate is more than 17 per 1,000 people a year, nearly double the global average. And six of the 10 countries with the highest death rate are in Africa, according to the CIA World Factbook.

While mortality rates are high, they are also falling — an attractive combination for insurers that raises the prospect of customers paying into their policies for longer.

High unemployment and above-average birth rates across much of Africa also mean employees can have many dependents, making it more likely they will seek funeral insurance.

“There’s a big demand for it because of the cultural behavior that we need to have these big dignified funerals,” said Jacky Huma, head of micro-insurance at the South Africa’s Financial Services Board (FSB), which estimates funeral premiums in the country totaled 4.9 billion rand ($494 million) in 2011.

Sad family members wait to pick up a coffin in NairobiReuters: Noor Khamis

Click picture to see photo gallery


While global financial services firms see funeral coverage as a way of gaining a foothold in many African markets, they will find plenty of local competition.

For example, Uganda’s A-Plus Funeral, a funeral director that offers insurance, has grown from just one director 10 years ago to 13 now, and reckons the 5 billion shilling ($2 million) local funeral insurance industry is growing 25 percent a year.

Meanwhile, Sizo Funeral Directors in Soweto, South Africa’s biggest township, offers funeral coverage for 14 people under one principal member for as little as 120 rand ($12) a month buying the cheapest funeral package of 5,000 rand ($500).

In most cases, though, the costs will be far higher, given the cultural and social pressure for lavish ceremonies and an “after tears” party that continues long after the burial.

“We Africans will tell you to slaughter a cow to feed people. And a proper cow is 6,000-8,000 rand ($600-$800). Food can cost you an average of 3,000-5,000 ($300-$500) excluding the cow. So you need insurance,” Sizo managing director Brian Mazibuko told Reuters in a shop lined with about a dozen shiny brown caskets.

An average funeral will set a family back 30,000 rand ($3,00), according to South African insurer Hollard, compared with a non-farm worker’s monthly salary of 14,000 rand ($1,400).

The sums involved have also attracted interest from outside the traditional financial services sector.

South Africa’s FSB has licensed 39 insurers to offer funeral products, including mobile phone operator Vodacom.

Its bigger rival MTN is working with Hollard to sell funeral products by phone in Ghana, where burial ceremonies can last for three days and the deceased is often laid to rest in a custom-made coffin matching his or her profession — a fisherman in a fish, a market trader in a banana.

Hollard is also in partnership with South African soccer club Kaizer Chiefs to sell funeral insurance to its 14-million strong fan base, with payouts of up to 50,000 rand ($5,000).

Entrepreneurs are finding other ways of turning the cost of African funerals into business opportunities too.

Kyai Mullei, a 36-year-old whiz-kid in Kenya’s mobile technology industry, has taken the local tradition of the “harambee” — in which communities and families come together to raise money for funerals — and given it a 21st century twist.

The cost of holding a harambee can eat up as much as a third of the money raised, particularly when many families are spread across the east African country. So Mullei has created a virtual harambee platform called M-Changa, from the Swahili word for contribution, where fundraisers can meet in a mobile community in exchange for a commission of 1.5 percent on all funds raised.

“Many people still live in rural areas so the chances that the committee all live in the same place are unlikely,” he told Reuters, adding the number of M-Changa harambees being set up is doubling every month.


cool infographics continued

What are people doing on their mobiles ? Well again, inmobi has made it very easy for you this morning, no need to engage ZAMPS, i dont think they have considered mobile yet as a medium. *exclaim if you must*….
Mobile wallet holds strong growth potential across developed and emerging markets, as infrastructure permits and services become available. Convenience is again a key driver for mobile wallet; however, many consumers in emerging markets are attracted by not needing to carry cash – See more at:
In my view, ecocash is a forerunner. Its educating the public for the banks and for free! There is plenty a service to be had on mobile, and the bank wallet will be the primary source of funds for this mobile lifestyle.
Go ahead and give them a call… The Masters of Mobile

Should banks in zimbabwe be worried about ecocash ?

Me thinks not, and I’ve got the coolest info graphics to prove my point.

Instead of fighting the establishment,they should be embracing the technology to leverage on a super user experience.

22% of mobile users globally have performed banking activities on their phones. While 15% of mobile users globally have used their phones as a mobile wallet, where they pay for products and services via SMS, a mobile phone app, or by touching their mobile phone to a sensor. – from Kantars, info graphic on money goes mobile;
I think the market has yet to deliver the ultimate end all and be all mobile solution in Zimbabwe. There is significant room  to improve and deliver a mobile lifestyle.  And i would unashamedly recommend that companies in Zimbabwe talk to to  get their mobile thinking groove on.
Inmobi’s infographic on mobile media consumption patterns should convince you if nothing else. Consumers are spending more and more time on their devices. its your captive audience, and you want to move their transactions to the same device.
* drops chalk and walks away from the  board*  # HelloChildren!

What next for the banking sector on the eve of mobile money?

Kenya’s mobile networks are now collectively the largest bank in the country, thanks to the mobile money deposits they hold on behalf of their subscribers.

According to the telecoms regulator, the CCK, the mobile networks held Sh226 billion (US$2.65 billion) in deposits at the end of last year — compared to the country’s largest commercial bank, which held deposits of Sh223 billion.

“The mobile money transfer service continued to record tremendous growth during the period. The number of mobile money transfer subscribers grew by 9.4 per cent to 21.1 million up from 19.3 million recorded in the previous period,” the CCK said in a report. Coupled with well over 63,000 agents, the M-pesa network far outweighs any bank branch network in sub-Saharan Africa.

In Zimbabwe, Ecocash’s growth, second only to Mpesa has seen them acquire 2.1 million customers. Compare this with banking sector account holders estimated at only 1.5million, the banks are struggling not just for share of customer wallet, but share of customer period.

Banks and financial institutions launching mobile wallets in the immediate future should expect to enter a hotly contested market, crowded with own-brand solutions that are limited to the delivery of proprietary services only, according to Mobey Forum’s Business Workgroup. This means that banks and financial institutions should think very carefully about their chosen structure and approach to market. Decisions taken now will have a significant bearing on the value they are able to deliver to customers and, in a crowded market, value will be the key to earning the loyalty of end-users.”

As each bank seeks to develop its own mobile banking solution, it must consider the various platforms already in the market, and attempt to differentiate its offering from another wallet.Image