Mobile money firm, Ecocash on Wednesday announced a partnership with remittance service provider Mukuru targeting mostly Zimbabweans living in South Africa.
The partnership comes a week after the Zimbabwe government announced it was incentivising international remittances through a bonus of between 2.5 percent and 5 percent of the value of the money sent that will be issued to those who send money to the country through normal banking channels with effect from October 1, 2016.
This was after remittances dropped 13 percent in the first half of the year to $397.3 million.
Diaspora remittances are among the top three sources of foreign currency for Zimbabwe.
An estimated three million Zimbabweans are living in South Africa but remittances from the neighbouring country have gone down in value as a result of the fall of the Rand against the United States dollar which is the major currency in use in Zimbabwe.
The partnership, facilitated and structured by Cassava, a financial technology subsidiary of Econet Group intends to introduce as many options as possible for Zimbabweans living in the diaspora to send money home in an affordable, safe and convenient way.
In terms of the deal between Ecocash and Mukuru, Zimbabweans in South Africa will be able to send money directly and instantly into EcoCash wallets in Zimbabwe.
Speaking at the launch of the partnership, Ecocash General Manager, Natalie Jabangwe-Morris said according to the recent Mid-Term Monetary Policy presented by the Central Bank, it had become clear that remittances have become topical for Zimbabwe with the bank emphasizing the importance of Diaspora remittances in curbing the persistent cash shortages.
She added that through Cassava, Ecocash was working towards broadening its portfolio of international remittances, including Ecocash South Africa.
“Whether we partner or go direct, our role as Ecocash is to ensure that remittances provide a real impact on our economy in addition to sustaining the livelihoods of customers,” she said.
Reserve Bank Director for Exchange Control, Morris Mpofu added that remittances were a major source of liquidity in the country.
“We have through our formal systems as the RBZ accounted last year for about $1 billion which came from the Diaspora through formal channels,” said Mpofu.
“Our research showed that about the same figure also came through the informal system and we can see how big the market is and the potential that is there to bring remittances into the formal sector,” he added.
In order to encourage remittances through formal channels, the RBZ last week announced that it will introduce a new Diaspora Remittances Incentives Scheme.
The scheme will benefit both the money transfer agents and the receiver of the funds on the basis of a 2%/3% split. “DRIS is in line with the Reserve Bank’s efforts to incentivize all earners of foreign currency in the country, it doesn’t matter whether it’s an exporter of goods, exporter of services, remittances or any free flow of money into the country. This is to assist in reducing the cost of receiving and sending remittances.”
“The mode of payment is such that the agent is expected to prefund the payout. That is why we are giving them the 2%, because we know it will be on a reimbursement basis. The Reserve Bank pays the incentive on the basis of money received
pofu said since the 5% scheme will be implemented on a reimbursement basis, the RBZ will do the reimbursement “within 48 hours of the money having been sent.”
Ecocash, with over 6.5 million customers and a network of almost 30 000 agents, is the dominant mobile money player in the country, enjoying a near monopoly.
Econet Wireless chief executive Douglas Mboweni said of the venture: “We are excited about our new partnership with Mukuru.”
Remittances play a major role in our economy and in the foreseeable future we will be extending the same convenience for Zimbabweans living in other countries as we continue to innovate and bring convenience closer to our customers.”
Mukuru chief executive André Ferreira said, “Mukuru has been the leading remitter to Zimbabwe for over a decade, focusing on making it easier for the diaspora to stay connected to the ones they love. When we needed to expand our reach in Zimbabwe, EcoCash with the largest last mile distribution, locally, was the obvious choice.”
Ecocash has over the years widened its partnership with renowned remittance players such as World Remit.