Ecocash commends IMTT reduction for spurring US$ transfers

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By Alois Vinga

ECOCASH Holdings Zimbabwe Limited (EHZL) has commended the reduction of Intermediated Money Transfer Tax (IMTT) on US$ domestic transactions for increasing transfers in the greenback.

In early 2022, the IMTT was increased to 4%, double what was charged for local currency transactions in what the authorities described as a strategy to discourage the use of the US$ and promote ZWL use.

The exorbitant tax measure took a huge toll on business transactions and largely affected money transfer firms before the Treasury moved to climb down on the policy measure in the 2023 National Budget.

EHZL board chairperson, Sherree Shereni hailed authorities for implementing the noble measure.

“We are encouraged by the growth in customers, volume and value transacted. The reduction of Intermediated Money Transfer Tax (IMTT) on USD domestic money transfer transactions from 4% to 2% effective 1 January 2023, has helped in the adoption and use of USD on digital money transfer services.

“We are continuously improving access and convenience for our customers by growing our distribution footprint across the country,” she said.

She said during the period, EHZL recorded revenue of ZW$101,3 billion for the period, compared to ZW$96, 8 billion in FY22, a 5% increase from previous year.

Whilst the regulatory restrictive limits on the Mobile Money business, as well as the general cash economy on the USD transactions put pressure on the revenue numbers, significant growth was noted in transaction volumes and values following the reduction in IMTT from 4% to 2% in January 2023.

A whopping 78% of revenue was driven by the Fintech business followed by Insurtech at 17% and lastly Digital Platforms at 5%, in line with the prior year’s performance.

“The business has competing needs for the limited foreign currency generated by the Company with priority being given to the financing of the upgrade and maintenance of the digital platforms in use by the Group.

“As the Company is unable to secure foreign currency for purposes of redeeming the debentures from the auction, the only available option is to raise the required foreign currency from members through the renounceable rights offer,” added Shereni.