IMTT cut buoys EcoCash revenue

ECOCASH Holdings (EcoCash) witnessed significant growth in transaction volumes and values for the year ended February 28, 2023, following the intermediate money transfer tax (IMTT) reduction in January 2023.
The IMTT was reduced to two percent from four percent and is currently at one percent, as it was slashed further.
The group said 78 percent of its revenue was driven by the fintech business followed by insurtech at 17 percent and lastly, digital platforms at five percent during the year under review.

During the year, the group introduced the EcoCash United States dollar (US dollar) wallet to consolidate its participation in the US$ economy which, according to official reports as of January 2023, accounted for 76 percent of expenditure.
“We are encouraged by the growth in customers, volume and value transacted.
“The reduction of IMTT on US dollar domestic money transfer transactions from four percent to two percent effective January 1, 2023, has helped adopt and use US dollar on digital money transfer services.
“We are continuously improving access and convenience for our customers by growing our distribution footprint across the country,” the board chairperson for EcoCash, Sherree Shereni, said in a statement accompanying financials.
Local research firm, IH Securities in its EcoCash equity research revealed that it expects an uptick in EcoCash US dollar transactions due to the downward revision in IMTT tax on US dollar transactions and the return of the domestic remittance service.
Meanwhile, the group recorded a five percent growth in revenue to $101,3 billion for the period, compared to $96,8 billion in the fiscal year 2022.
EcoCash achieved earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of seven percent against 18 percent in the prior year mainly due to the pressure on costs due to the prevailing operating environment.
Exchange losses related to the debentures amounted to $30,1 billion for the year under review.
“The board initiated a capital raising process to facilitate redemption of the company’s debentures which matured at the end of April 2023.
“Renounceable rights offer of US$30,3 million of new ordinary shares in the Capital of the Company is under consideration,” Shereni said.
Shereni said the business has competing needs for the limited foreign currency generated 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 to redeem the debentures from the auction, the only available option is to raise the required foreign currency from members through the renounceable rights offer,” Sheren