Weakened Zim dollar delivers financial blow to Cassava Smartech
Africa focused smart technology solutions provider Cassava Smartech suffered ZWL$2- billion in foreign exchange losses during its full year of operation after the unstable Zimbabwe dollar failed to hold on against major currencies, most notably the US dollar.
Cassava was only four months old in February 2019 when authorities initiated radical currency reforms that led to the return of the Zimbabwe dollar as the sole medium of exchange for domestic transactions four months later.
Board chairperson Sherree Gladys Shereni said last week: “The continued depreciation of the Zimbabwe dollar against the United States dollar had a significant impact on our financial performance as we realised foreign exchange losses amounting to ZWL$2-billion.”
Shereni added that revenues rose by 43% to ZWL $4,6-billion, compared to ZWL $1,1-billion during the four months to February 2019.
Mobile finance and banking businesses contributed 89% of the revenues, from 91% previously.
Cassava’s gross profit margin surged up 68% from 57% in 2019, while earnings before interest, tax, depreciation and amortisation margin defied Zimbabwe’s economic crisis, rising to 29%, from 27% previously.
But the review period was difficult for the firm that superintends over Zimbabwe’s largest mobile money transfer outfit, EcoCash.
A sour relationship between EcoCash and the central bank of Zimbabwe resulted in a delay in the release of the company’s financial statements. Ecocash was accused of using the alternative market to sabotage the economy, an accusation the company denied.
“The business revalued its property and equipment for the year ended 29 February 2020 as the associated value in Zimbabwe dollars was no longer meaningful due to inflation. Most of the group’s tangible and intangible assets were procured in foreign currency. At the reporting date, the group had net foreign liabilities amounting to US$42,8 million, of which US$30,5 million comprises the group’s 50% allocation of the overall liability in the debentures issued by Econet Wireless Zimbabwe Limited,” Shereni said.