CASSAVA Smartech Zimbabwe Limited (CSZL), a holding company for Ecocash, says strict national policies targeting mobile money platforms have contributed towards the decline of the group’s life business.
Presenting a trading update for the period ended November 30 2020, CSZL chairman, Charmaine Daniels attributed the decline in the group’s life business to the impact of policy directives by the Reserve Bank of Zimbabwe (RBZ).
“The life business recorded a decline in terms of policies underwritten following the suspension of some EcoCash services for premium payments by community groups. EcoCash revenue registered a growth of 29 % from the second quarter of 2020, mainly on the back of a tariff review, however active subscribers, declined by 6%,” she said.
Between April 2020 and September 8, 2020, the RBZ through its subsidiary, the Financial Intelligence Unit (FIU) issued a total eight directives targeted at the EcoCash platform.
These included reductions in transactional limits, suspension of agent lines, directive to integrate on the Zimswitch platform, among others measures.
As a result, the closure of merchant lines which were being used by community clubs negatively impacted the life policies revenue.
The RBZ defended the directives arguing they were meant to block illegal foreign currency dealers from abusing the platform by increasing parallel market exchange rates and derailing government’s efforts to stabilise the economy.
The period after the implementation of the directives has been marked by relative price and exchange rate stability.
Meanwhile, CSZL reported that revenue for Insurtech business grew 131% compared to the second quarter.
The growth was on the back of strong growth in the short-term insurance business which registered a 165% increase on Q2 revenues and the company’s high-end comprehensive and diverse product portfolio which spans across all industry segments, with a specific focus on agriculture.
“Reflecting this, in the recent publication by IPEC, the company was placed in the top 10 insurers in Zimbabwe, which is strong recognition for a new entrant that has been in operation in the insurance industry for only two years,” Daniels added.