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Econet’s Cassava Smartech bemoans hyperinflation, subdued demand

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By Alois Vinga

ECONET subsidiary, Cassava Smartech has bemoaned the reemergence of the hyperinflationary environment, dwindling consumer demand and the continued erosion of the Zimbabwe dollar.

In a recent trading update for the nine months ended November 30 2019, the company said the current economic environment was making it difficult for business operations to flow smoothly.

“The macroeconomic environment over the nine months under review has continued to be operationally challenging, characterised by subdued consumer demand as a result of the continued depreciation of the Zimbabwe Dollar, a reemergence of hyperinflation, erosion of disposable incomes, high unemployment and chronic power outages,” read the update.

In order to keep afloat, the company continues to leverage on the existing business model premised on the provision of best in class service and value creation.

The group continues to innovate and invest further in its technology platforms in order to provide customers with relevant products and services whilst improving access and convenience.

In financial performance, the group registered a 19% increase on mobile money platform transactions during the period under review.

The active customers base also increased by 17% in the same period while Steward Bank’s customer base grew by 75%.

“The bank has however recorded a decline in transactions on its Point of Sale terminals by an average of 46%, a trend which is commensurate with declining volumes in the retail sector as consumer disposable incomes fail to keep up with inflation,” the trading update further read.

The insurtech business recorded a 17% growth in life policies in the period under review.

Significant growth was also seen in the short-term insurance business which grew by 5,050% compared to the same period prior year.

Cassava said the EcoSure and Moovah businesses have managed to maintain their claims ratios at a level lower than the industry average.

Going forward, the company continues to focus on identifying and developing opportunities in the market that are consistent with the changing customer demands without compromising on service excellence.

Cassava Smartech joins the list of several companies which have raised complaints over the impact of eroded incomes on sales volumes.