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Strive Masiyiwa’s next challenge
Respected by world leaders ... Strive Masiyiwa (right) with Bill Clinton and his
daughter
NEW ZIMBABWE 19-08-2014
SPEAKING at a microfinance symposium in Turin, Italy, recently, Econet Wireless founder
Strive Masiyiwa recalled the ruling by the judge who gave him a licence in 1998 saying that
“70 percent of people in the country had never heard a telephone ring”
The licence was granted after a costly five-year legal battle against the government.
According to the UK-based Guardian newspaper Masiyiwa told the Turin gathering that
“today, 75 percent of people [in Zimbabwe] have a cell phone; and I want 75 percent of the
people in Africa to have a bank account … on a mobile phone.” Not only that, Econet
Wireless has since grown into a diversified technology and financial services group with
operations in 17 countries including Botswana, Lesotho, Kenya, Nigeria, South Africa and
New Zealand.
Another problem, and opportunity, arose when the government ditched the Zimbabwe dollar
in 2009 for more stable foreign currencies. The transacting public, having struggled with
huge amounts of worthless cash in the hyperinflation years, welcomed the decision. But with
the country’s productive and export sectors all but collapsed, there just wasn’t enough of the
foreign currencies in circulation.
“If you wanted to buy a packet of sweets for your child, you couldn’t get change,” said
Masiyiwa. Econet intervened with a mobile payments system which has set Zimbabwe on
course to become Africa’s first cashless economy. “Today 43 percent of the GDP moves
through Econet Wireless,” said the telecoms mogul. Explained Econet’s chief executive,
Douglas Mboweni , recently said: “We do not expect anyone to still be using paper money in
a year’s time. It will be just like Europe or America, where you no longer see people carrying
bundles of cash.”
Masiyiwa told the Guardian that his next challenge is to create a product that allows people
who are informally employed, such as smallholder farmers and casual workers, to access
credit. “In Africa 70 percent of people are informally employed,” he says. “The big frontier for
us is to create platforms where those people can access credit.” There is little risk that they
will get into unmanageable debt because the banks won’t extend excessive credit, calling
the system “self-regulating”.
“We’re trying to build up a savings culture where people are encouraged to save, even if
they only have a dollar – for children’s school fees, for transport, for the doctor. A savings
and credit infrastructure builds resilience.” However, in order to reach the unbanked,
financial institutions – and telecommunications companies – must design services that are
practical, simple and affordable. “I’ve got a customer who has a dollar in his pocket and has
got to decide to have some lunch, call his cousin or go to the doctor,” he said.
“We have to develop services with sensitivity to the fact that in Africa our customers don’t
have the same disposable income as in New Zealand, for example.” It would however, be a
mistake to assume the poorest behave differently to other customers. “Their behaviour and
aspirations are no different from those who have higher incomes,” cautioned Masiyiwa.
“They want to use Facebook. They want to use WhatsApp. We have to find ways for them to
access those things with their very low income.”
The UK Guardian 19-08-2014
- Will Zimbabwe be Africa’s first cashless society? Telecommunications company, and now
mobile banking service, Econet Wireless predicts that in less than 12 months notes and
coins will be long-gone from this southern African country. “We do not expect anyone to still
be using paper money in a year’s time,” the company’s CEO Douglas Mboweni recently
said. “It will be just like Europe or America, where you no longer see people carrying bundles
of cash.” The collapse of Zimbabwe’s economy in 2002 paved the way for Econet Wireless’s
mobile payment system. “Hyperinflation had destroyed people’s confidence in financial
institutions,” said the Zimbabwe company’s founder, Strive Masiyiwa, at the Mastercard
Foundation Symposium on Financial Inclusion in July.
“The lowest denomination circulating was $1,” Masiyiwa said. “If you want to buy a packet of
sweets for your child, you can’t get change.” The company set up a mobile payment system
that handles small amounts and allows people to save as little as $1. “Today 43% of the
GDP moves through Econet Wireless,” he concludes. Masiyiwa was born in Zimbabawe
(then Rhodesia) in 1961. He and his parents fled the country in the turmoil after prime
minister Ian Smith declared independence in 1965, settling in Zambia. His parents, who ran
their own business, could afford to send Masiyiwa to school in Scotland when he was 12.
After school he studied electronic engineering at the University of Wales and worked briefly
for a computer company in Cambridge before returning to Zimbabwe in the early 1980s.
Econet Wireless was established in 1998, but not before a fight. Masiyiwa waged a five-year
legal battle with the government for a licence to deliver telephone services. The company
now operates in 17 countries including Botswana, Lesotho, Kenya, Nigeria, South Africa and
New Zealand. In 2000, while the UN filed a civil suit against Mugabe, Masiyiwa moved his
family and company headquarters to South Africa. Econet Wireless first developed mobile
payments to help NGOs transfer money to refugees after the war in Burundi ended in 2005.
“Donor agencies were trying to find ways to make cash disbursements to refugees,” says
Masiyiwa. “So we built the payment system initially not as a business but as a way to help
humanitarians get money to people in rural areas who were trying to re-establish their lives.”
That model was extended and now mobile money transfers are central to Econet Wireless’s
business. Like M-Pesa before it, the company blurs the lines between telecomms and
banking. Masiyiwa is passionate about this latter part of his business. He believes that
extending saving and credit services to the poorest people gives them “extraordinary dignity
and a sense that they are in control of their own lives”. His next challenge is to create a
product that allows people who are informally employed, such as smallholder farmers and
casual workers, to access credit. “In Africa 70% of people are informally employed,” he says.
“The big frontier for us is to create platforms where those people can access credit.” He says
there’s no risk that they will get into unmanageable debt because the banks won’t extend
excessive credit, calling the system “self-regulating”.
But Masiyiwa says that offering people the ability to save is even more important than credit.
“We’re trying to build up a savings culture where people are encouraged to save, even if
they only have a dollar – for children’s school fees, for transport, for the doctor. A savings
and credit infrastructure builds resilience.” In his speech to microfinance experts at the
symposium in Turin, Masiyiwa recounted a story about the judge in Zimbabwe who granted
Econet Wireless’s licence in 1998, saying that 70% of people in the country had never heard
a telephone ring. “Today, 75% of people [in Zimbabwe] have a cell phone,” he said “And I
want 75% of the people in Africa to have a bank account … on a mobile phone.”
And Masiyiwa has even found a solution to the energy problem that could prevent him from
realising his dream. “We have developed solar charging stations where people can go into a
kiosk and plug in their phone for free. Because our money is not made from someone
charging the phone. It’s made from someone using the phone.” By way of lessons learnt,
Masiyiwa says that in order to reach the unbanked, financial institutions – and
telecommunications companies – must design services that are practical, simple and
affordable. “I’ve got a customer who has a dollar in his pocket and has got to decide to have
some lunch, call his cousin or go to the doctor. We have to develop services with sensitivity
to the fact that in Africa our customers don’t have the same disposable income as in New
Zealand, for example.”
But the billionaire businessman cautions that it’s a mistake assume the poorest behave
differently to other customers. “Their behaviour and aspirations are no different from those
who have higher incomes,” he says. “They want to use Facebook. They want to use
WhatsApp. We have to find ways for them to access those things with their very low
income.”