ZIMBABWE Stock Exchange-listed Cassava Smartech’s consolidated revenues for the six months ended August 31, 2020 (H1 FY21) increased by 443% in nominal terms, from the same period last year largely driven by an increase in transactional values due to hyperinflation.
BY FIDELITY MHLANGA
Zimbabwe’s year-on-year inflation for the month of August, at 761,02% is the second highest rate globally after South America’s Venezuela. Already, listed companies have adopted the hyperinflation reporting standard –IAS 29.
The company said EcoCash transaction activities were subdued after the COVID-19-induced national lockdown was imposed by government on March 30. EcoCash reported high volume transactions with less value during the period.
The value of transactions processed on the platform tumbled to about 19% of the total value processed on the national payments system from 30% the previous year.
“EcoCash revenue contribution has been reduced as a result of macro-economic factors. Despite the reduced contribution of EcoCash to the group’s performance, the group’s revenue diversification strategy has seen some resilience spurred by the exponential revenue growth in the upcoming Insurtech and the Vaya Technologies businesses,” the company said in a trading update.
During the past six months, there have been several directives issued by regulators, which have impacted on the group’s operations, mainly EcoCash.
The directives include tighter transactional limits, the suspension of agents with transactions above $100 000 and the requirement for their re-registration.
Agent to agent transactions were also suspended.
The group said EcoCash had increased financial inclusion in the country.As at August 31, 2020, more than 10 million customers had access to financial solutions, from about 600 000 prior to the launch of EcoCash, the report noted.
The EcoSure funeral cover product now insures more than two million people.Cassava said Steward Bank’s contribution to the group revenues remained stable.
It said the bank was expected to maintain that position once a systems upgrade project underway is completed.
The project is expected to improve customer experience while opening up new revenue streams. Steward Bank’s revenue growth was driven by growth in interest earning assets.
However, the growth in real terms was subdued, as a result of hyperinflation which has been exacerbated by the COVID-19 pandemic, resulting in low demand across most sectors of the economy.
The Insurtech business reported significant growth, riding on the strong performance in Moovah revenues.
The group sees higher growth prospects for this business unit as the company continues to introduce new products under the short term insurance line.
Life insurance remained firm, with a steady growth in policies.