Why, outside Zimbabwe (& Kenya), mobile money in Africa hasn’t succeeded

L.S.M Kabweza Avatar

ecocash-bannerWhenever I’m in a foreign country in the region, I try to observe and ask questions about mobile stuff. Mobile money especially is a big interest and the one thing I have wanted to understand more is how mobile money hasn’t been as remarkably successful in these other countries in the region, as it has in Kenya, and now Zimbabwe. Of course I can only compare what I have seen (in Malawi, Zambia, and South Africa for example) to what I see here at home in Zimbabwe. M-PESA is its own story. What keeps coming to the fore in the observations and answers I get is that EcoCash is a company, the rest are value added services.

The one thing easily noticeable when you look at the way EcoCash has managed successes in mobile money is how Econet was deliberate and just me too. Econet, soon after the launch of EcoCash, separated it from the regular mobile telephony business. Not in a new business unit kind of separation, no; a whole new company named Econet Wireless Services was formed.

The new company was independent of the regular telephony business, which meant their strategy and execution were not limited to only what made sense for the regular Zimbabwean telephony business. They could decide & rapidly execute like a startup and in the process make mistakes but not let these slow them down. With the backing of the group they were essentially a very rich startup marching boldly to change how people and businesses transact. You can read more about the independence of Econet Services from the regular business in a report done by the GSMA here.

Top talent. Econet hired a CEO to oversee the new company. The new CEO, Darlington Mandivenga, was pulled from his CEO role at Econet Burundi. He’s a character whom, from the few times we have met and discussed, we can summarise as the “execute ruthlessly, make and fix mistakes quickly, learn and march on” kind. Mandivenga’s arrival unleashed so much activity even as journos it was hard to keep up. Many journos came to expect a “humble but unapologetic” remark from the guy at least a number of times at each press briefing.

Mandivenga was not the only top talent hired for the project. There was former M-PESA executive, Japhet Aritho; former BankservAfrica executive Cuthbert Tembedza, and former Reserve Bank of Zimbabwe executive Francis Matseketsa.

Buying a bank. Talent is only part of the story. Econet bought a whole bank to ensure they were covered legally as pressure from the traditional financial mounted on the central bank. The banks wanted EcoCash regulated tighter and, after buying a bank, EcoCash was now just like them; the only difference being it had unfettered access to the country’s single largest (70%) collection of mobile subscribers.

The investment. Of the 3 mobile money services that are run by mobile money operators in Zimbabwe, EcoCash was the last to launch. But just after launch, the country was painted EcoCash. No, not just in the newspapers and the billboards. More importantly Econet was painted all over public transport vehicles, called Kombis in Zimbabwe.

The product was visible to every middle to lower bracket consumer in the country it was hard for them to not be aware of this new option which was (save the ridiculous cost of doing so) a much more convenient alternative to transferring money to relatives around the country.  IT wasn’t just the kombis; it was the brand ambassadors you’d meet every day in the high density suburbs and industrial areas registering people one by one, the registration bonuses. The report by the GSMA says Econet poured in a total $6.3 million for EcoCash customer acquisition alone.

Solving a problem. Remember that in Zimbabwe these are the same consumers banks had jerked around for years. Some banks, to this day, still don’t pay depositors their money on demand. Yes, you Trust Bank. And they get away with this robbery in full view, and therefore endorsement, of the Reserve Bank of Zimbabwe. All this makes for a system the public just didn’t trust anymore for payments and along came EcoCash.

It wasn’t just a trust issue, the bigger one is that financial exclusion in African countries is a big problem. There are millions that simply can’t access financial services for a number of reasons ranging from them just not transacting amounts large enough to be worth the bank branch overheads, there being no banks in remote rural or high density residential areas in the city, having an account being seen as an unnecessary expense due to the high service fees charged (People have complained of losing money to bank charges, even when they don’t transact resulting in accounts going into the negative over time). The problem is financial exclusion is not a Zimbabwe thing; it’s continent wide. How are mobile operators in all these countries failing to solve it? I think the following point can help us understand it.

Not going into bed with the banks. You can sense with the other regional mobile operators, the same stance Telecel Zimbabwe had (and later regretted): “let’s focus on the mobile telephony business and let the traditional bankers do mobile money for us”. It’s as if mobile money is a bother and not an opportunity to meet a much yearned for need. The problem with this is that as a business the mobile operator then expects the bankers to quickly remodel their businesses to maximize on the new possibilities brought by mobile technologies.

The reality is that businesses take time to change, worse so if the need to change is something only high up the priority list of external partners. Why would banks suddenly see a need to fast-track an adoption of these new ways when their for profitability – high net worth individuals, investors, government, business and their employees – are still relatively there and, thanks to dollarization, returning solidly.

The result is the incremental mobile banking innovations, instead of the outright mobile money future that EcoCash is. It’s the same banking ‘innovations’ that the banks had been doing all along anyway without much result well before the DFID even considered handing Vodafone a bag of cash to trial M-PESA.

It’s not the fault of the banks – Never did say that but just to be clear. To add to their internal innovation challenges, banks are so heavily watched and regulated that it’s almost impossible for them to make grey area bold moves of the EcoCash kind. When banks are not sure how the regulators will treat an issue they prefer writing the regulator and lobbying them then waiting for regulation to catch up to technology before they move in. Such catch-up can of-course take months, years even.

There are exceptions though; like CABS in Zimbabwe who, despite sharing the same environment with fellow banks, still aggressively compete for the new mobile pie, blurring the lines between mobile money and mobile banking. But to discuss the CABS case and the new platforms that have enabled them to do achieve their successes would be to digress, this article was meant to discuss just the mobile operators.

Of course to say EcoCash did some things right doesn’t discount the other environmental that the happened; like a very literate population ready to take up any new value provided via mobile phones.


  1. observer

    is ecocash really sustainable? it seems to me they (econet) are only splashing a lot of money to sustain this product and with the onset of zimswitch’s platform plus the resistance of the other banks this will be interesting space to watch!

    1. Zig Ziglar

      Econet is really sustainable, I wonder what makes you think it is not. ZimSwitch is as good as dead! Banks can resist all they want but we follow were convinience is….that is EcoCash!

      1. Anti Spam

        You are joking I am sure? If you want to pay an average of 6% to move mobile money then stick with ecocash. You obviously have money to burn. I use TextaCash and its cheap (@1% plus 20cents) plus there is always cash waiting not the ecocash answer of “sorry, no cash today!”

        1. Zig Ziglar

          1 billion dollars moved via EcoCash is testimony enough Ecocash is onto something.
          Textawhat?? from CABS?? I wouldnt touch anything from that clueless bank. I would use mobile moola from! FBC maybe but look at the fragmentation!! Banks are just clueless and competition will wipe them out

          1. Anti Spam

            1 Billion Dollars moved is the key word, moved between their own accounts where they can refund the fees! Actual customers might try this once or twice until they realise that a full days wages get eaten in the fees…
            TEXTACASH because you actually get what you pay for, not making some single dude rich!

            1. Zig Ziglar

              In fact, point of correction 2.1 billion and the countrys GDP is 10 billion.
              What more proof do you need to see that Ecocash is the future! These are just tiny creases in the system which will get ironed out by market forces.

    2. Gweja

      i have just sent my lil bro his $400 MSU fees all the way from Johannesburg, thanks to Ecocash. And you tell me its unsustainable? Not sure what u smoking.

      1. Anti Spam

        Be honest and share how much it cost you! (and him to receive it)

        1. Septic Tank

          Don’t confuse cost incurred by customer with sustainability. The cost to the consumer may be higher than other players but that does not mean EcoCash will not survive. Like it or not, Ecocash is here to stay.

          1. Anti Spam

            Oh I understand that but high fees should mean no further use therefore not sustainable!

  2. imjustsaying

    Is ecocash sustainable? $2.2b transxns in 2 years. Average comm 3% send money + 4.5% cash out thats 7.5% on $2.2b = $165m in 2 years. Used for marketing $10m? data centre $5m? last mile service fees to econet ussd $30m? mandivenga and his lieutenants and underlings $10m? other overheads $10m? total $65m? Ebitda profit over 2 years $100m? Buying that bank was worth it then. Yeah very sustainable. All ecocash needs to do is keep milking the market until a competitor as pervasive as them forces them to take note. At that stage they can still cut their rates massively and continue profiting after years of hyper profiteering and a much stronger balance sheet and brand value than any new entrant. Disturbing stuff but thats the rewards for first to market action takers…

    1. Anti Spam

      Marketing budget 2013 5 times your estimate! All to try eliminate the players that want to offer a value for money service. Well done imjustsaying

  3. vaGudoguru

    Well written article & analysis. Interesting indeed

  4. edc

    Perhaps the Author should define the ‘Success’ that he refers to so that people who have not had experiences of other countries can compare and determine the success level.

    For example I live in Tanzania where Mobile Money (Tigo Money, Airtel Money and Mpesa) has revolutionised the way people transact especially the low income.

    Not all banks have yet embraced Mobile Money transactions though especially withdrawal but almost all of the banks, one can make a deposit from a mobile money platform. In any case only 15% of the population use brick and mortar banks hence the Majority using the Mobile Money transfer do not even need the traditional banks anyway.

    The progress of Mobile Money in Tanzania has been so rapid that the authorities are struggling to keep up with regulations, for example you can find an MPESA agent receiving and dolling out cash to customer under a tree with serious security challenges and this is where authorities need to come in and put some form of regulations and enforce them.

  5. Tinashe Nyaruwanga

    Well written article and very informative. For the major reason why Ecocash has succeeded is that they have managed to meet a need of the largely un-banked population by providing a simple solution that provides a lot of convenience. You see, in Zimbabwe, it is said that there is about US 7 billion dollars circulating in the economy and through Ecocash they can tap into this money.

    Another important point that the writer mentioned and that I agree with is the “timing” . Ecocash was offered in the aftermath of the financial meltdown of the hyperinflation period. People sinmply didn’t trust putting money into banks at all.

    Econet also benefitted from learning from other mobile money screw ups. And because of this it is definitely going to be better than others.

  6. observer

    Interesting arguments but as a product I still strongly doubt its sustainability as this is not an independent platform for all the major banks their only trump card is the fact that most of the population is unbanked, however like what I’m just saying said the presence of a new competitor will truly test this rather expensive product.

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  9. Timooo

    Why, outside Zimbabwe (& Kenya), mobile money in Africa hasn’t succeeded! I would like to differ on the topic alone, In Côte d’Ivoire, the French phrase “faire un Orange Money (doing an Orange Money)” to mean a money transfer is now common currency. West Africa generally and Mali in particular, with Orange Money individuals or business customers convert their money for storage in an electronic wallet from which they can carry out money transfers and payments