Harare,– Diversified digital solutions group, Ecocash Holdings Zimbabwe Limited, has reported a ZWG148.7 million loss following its migration to the newly introduced Zimbabwe Gold (ZWG) currency.
The transition, mandated by the Reserve Bank of Zimbabwe (RBZ) on April 5, 2024, aimed to stabilise the economy but brought both opportunities and significant hurdles for businesses.
Presenting the group’s financial performance for the half-year ending August 31, 2024, Ecocash Board Chairperson Sherree Shereni revealed that compliance with international accounting standards during the migration process contributed to the losses.
“To comply with International Financial Reporting Standards, specifically IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ and IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’, the Group had to restate prior year comparatives to April 5, 2024, using the inflation index,” Shereni explained. “Consequently, the Group recognised monetary losses amounting to ZWG148.7 million due to this process.”
The reported losses stemmed from the restatement of opening ZWL balances under hyperinflationary accounting rules before converting to ZWG. However, the company recorded a significant fair value gain of ZWG1.2 billion from proceeds linked to a reconstruction scheme involving Zimbabwe Stock Exchange-listed Econet shares.
Despite the migration challenges, Ecocash achieved impressive financial growth. Profit before tax for the period surged to ZWG1.66 billion, a sharp rise from ZWG144.6 million recorded in the same period in 2023.
Additionally, the Board of Directors announced a distribution from the proceeds realised from transferring non-banking business units to Econet Wireless Zimbabwe Limited. This comprised ZWG910 billion in cash, equivalent to 236,371,255 Econet shares, and a direct distribution of 236,371,255 Econet shares.
Shereni reaffirmed the company’s commitment to leveraging technology and innovation to maintain its market position.
“The business will continue to drive innovation by leveraging digital technologies to increase operational efficiencies. We aim to grow our partnerships and collaborations to meet the ever-changing customer needs,” she said.
Ecocash Holdings’ diversified portfolio includes mobile money services, digital banking, and insurance products. The group remains focused on delivering exceptional customer experiences while navigating Zimbabwe’s evolving financial landscape.
The transition to ZWG has presented broader economic implications, with businesses across the country grappling with the complexities of the new currency regime. Observers are closely watching how companies like Ecocash will adapt and maintain growth in this challenging environment.