ECOCASH Holdings Zimbabwe Limited (EcoCash) suffered a 43% value loss in its ZiG balances for its third quarter ended November 30, 2024, following the “gold-backed” local currency devaluing, which threatens depositors’ funds under its banking unit, Steward Bank.
At an extraordinary general meeting held in April 2024, EcoCash shareholders met to consider and approve a proposed scheme of reconstruction, which was passed.
The reconstruction saw all non-banking assets transferred from EcoCash to its sister firm Econet Wireless Zimbabwe Limited, with the former only remaining with Steward Bank.
The non-banking units were EcoCash (Private) Limited, VAYA Technologies Zimbabwe (Private) Limited, Econet Insurance (Private) Limited, Econet Life (Private) Limited, MARS Zimbabwe (Private) Limited and Maisha Health Fund (Private) Limited.
On September 27, the ZiG currency devalued significantly to US$1:ZiG24,39 from a prior day comparative of ZiG13,99, which now threatens Steward Bank depositor balances.
“A key development during the quarter was the official devaluation of the gold-backed local currency, ZiG, from 13,9 ZiG per US dollar to 24,4 ZiG per US dollar on September 27, 2024,” EcoCash said in its trading update for its third quarter performance ended November 30, 2024.
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“This development resulted in a 43% loss of value on ZiG balances held by the bank. The bank continued to pursue strategies to avoid capital erosion.”
As a result of its bank balances being under threat, the bank has initiated a strategy of improving operational efficiencies through leveraging technology.
“This resulted in an increase in operating profit. The bank is compliant with Tier 1 Capital requirements as prescribed by the Reserve Bank of Zimbabwe,” EcoCash said.
EcoCash reported that revenues for the quarter increased by 80% over the revenues for the previous quarter.
“EcoCash Holdings continues to focus on identifying and developing opportunities in the market that are consistent with providing convenient digital solutions to the increasing customer demands,” EcoCash said.
“The organisation will continue to adapt to the changes in the operating environment and implement strategies to create shareholder value and maximise returns.”
Part of the new opportunities identified by EcoCash includes the Omni Channel platform, a unified, secure digital platform, enhancing customer experience and security.
“This platform integrates essential banking services, including account and card management, bill payments, and fund transfers.
The bank also launched a new ZIPIT Fund Transfers service. Customers can now transfer funds from any foreign currency account or mobile wallet directly to their Steward Bank VISA card using the ZIPIT platform,” EcoCash said.
“This service offers speed, convenience, and flexibility. The bank further enhanced its service offerings with the implementation of card-less withdrawals and deposits through its intelligent ATMs [automated teller machines], thereby affording customers heightened convenience and flexibility in conducting transactions.”