Zimbabwe’s Econet launches mobile money loan service

APRIL 04,2014.

ITWEBAFRICA.

Zimbabwean users of the mobile money platform, EcoCash, are now able to access urgent loans of up to $500 using their cellphones.

With over 3 million users, EcoCash, run by Zimbabwe’s largest mobile operator Econet Wireless, has sought to solidify its market share through introducing more solutions, company officials have said.

Cuthbert Tembedza, a senior executive for EcoCash, said on Wednesday that the launch of ‘EcoCash Loans’ was a follow-up to EcoCash Save, a savings account run in partnership with Steward Bank.

Econet Wireless, founded by telecommunications tycoon, Strive Masiyiwa, has a majority stake in Steward Bank.

Tembedza said there is no paper-work required for application for the loan while there is also no need for collateral.

“We look at the savings balance in your wallet and how often you use EcoCash for transactions and how much you spend on airtime. We know you enough to trust you with the money we will lend you through EcoCash Loans,” he said.

Lance Mambondiani, the business development and strategy executive at Steward Bank, which holds the banking licence for EcoCash, told ITWeb Africa that repayment will be done on a once off basis within 30 days of getting the loan.

About 5% of the loan applied for will be levied in processing fees while there is no interest rate applicable.

He said they were anticipating a default rate of around 5% as the initiative was mainly targeting the lower end of the market.

“From today, people will be able to access loans using their cellphones. It is the right thing to do after getting one million new accounts in just three months,” said Tembedza.

Steward Bank chief executive officer, Kwanele Ngwenya said there is “now $20 million sitting in the one million accounts opened through cellphones”.

He said both EcoCash and Steward Bank had undertaken extensive research and had shared findings of the research – which he claims proved the ‘safety’ of the mobile based loans and a low anticipated default rate – with the country’s central bank.

Tembedza added that there are no details or documents needed for the processing of the loans as sufficient paperwork is already submitted when customers buy Econet cellphone SIM cards and when they register for EcoCash.

Zimbabweans also have other options for mobile money systems, with Telecel Zimbabwe’s Telecash gearing up to sign 60% of the company’s 2.5 million network subscribers.

NetOne also has its own mobile money transfer service, One Wallet, which it has said it is revamping.