How a mobile phone vendor became Zimbabwe's fastest-growing bank

Money is whizzing through the airwaves and cell towers of Zimbabwe, as a mobile cash-transfer system is on track to become the country’s biggest bank.

EcoCash, a mobile money-transfer service operated by telecommunications company EcoNet Wireless Zimbabwe, has reached a million subscribers in under six months since its launch, according to Mobile Money Africa. EcoCash enables money transfers across all networks between mobile users, a rapidly expanding sector of the Zimbabwean population.

And in a country where 80 percent of residents do not have access to mainstream bank accounts, a service that requires nothing but a mobile phone is a popular and more convenient alternative. Mobile phone users now make up 77 percent of the population, compared to just 6 percent in 2006, reports Mobile Money for the Unbanked. And EcoNet Wireless, EcoCash’s parent company, has that market cornered in Zimbabwe, with 6.5 million customers, which represents 70 percent of the market share of cell phone users, according to Mobile Money Africa.

EcoCash, a mobile money-transfer service, has reached a million subscribers. “There is a lot of money to be made by investing in the poor,” says Deputy Prime Minister Arthur Mutambara.

Within that segment, EcoCash has seen success by targeting the low-end market. Customers don’t need to have bank accounts, and 1,400 street agents throughout the country help make subscribing a quick and easy process. Agents receive a commission when customers total transactions reach $50, encouraging agents to target those likely to be actively using the service.

While the legalization of foreign currency in 2009 has pulled Zimbabwe’s previously plummeting economy out of a nose-dive, it’s also created challenges, including a shortage of change. The "coin problem" can make small transactions difficult to complete accurately, reported the New York Times, and small transactions tend to be the kind low-income users make. But now mobile cash services like EcoCash allow precise payment, regardless of the size of a transaction.

The ease of transactions is just one factor contributing to the skyrocketing popularity of EcoCash. Actual banks are more difficult to access than mobile phones, and the dark history of the Zimbabwean dollar contributed to widespread distrust of traditional banking services, reports the Zimbabwe Daily Mail.

Visibility aids EcoCash in its market domination. EcoCash markets its services through advertisements on public mini-buses, known as kombis, in urban areas, and over radio talk shows in rural areas. Widespread marketing helps keep EcoCash ahead of other, smaller competitor. And while some competitors require users to have bank accounts, EcoCash allows customers to bank with just their phone.

EcoCash modeled much of its strategy off of the success of Kenyan mobile money service M-Pesa, also under the umbrella of a telecommunications company, Safaricom. M-Pesa’s popularity has exploded in Kenya, with a customer base of close to 15 million subscribers, up from 2 million over five years.

Like EcoNet, M-Pesa’s parent company, Safaricom, dominates the telecommunications market in Kenya with a 67 percent market share, according to The Zimbabwe Independent. Like EcoCash, M-Pesa grew rapidly in its first year, although EcoCash’s first-year growth outpaced that of M-Pesa. And while Microfinance Africa reports that other countries have had difficulty replicating the long-term success of M-Pesa, similar marketing and business strategies and market domination make EcoCash a potential candidate to exhibit similar growth.

Most current EcoCash transactions are small, but the service is looking to increase its reach “into business services, such as bulk payments, salaries, and merchant transactions,” according to Mobile Money for the Unbanked (MMU). Customers currently pay a fee between 2 percent and 7 percent for transfers, but EcoNet hopes that as business volume continues to increase, those fees will be lowered further.

EcoNet sees the mobile money service “as a strategic business, rather than simply another product in its portfolio,” Francis Matseketsa, the head of EcoCash, told MMU:

"EcoCash believes that its primary economic driver will be cost savings on airtime distribution, as transaction revenue alone has not yet pushed the service to break even ... [and] offers a 5 percent discount on airtime purchased with EcoCash, a promotion that has proved very popular with customers."

Yet whether or not EcoCash proves to successfully bring Zimbabwe towards a thriving cashless economy, it has already demonstrated its ability to create jobs and keep cash changing hands – or phones – in what was long known as one of the world’s worst economic climates.

• This article originally appeared at Global Envision, a blog published by Mercy Corps.

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