Shareholders in Zimbabwe’s largest mobile phone operator are set to become owners of a company with ambitions to be an internet giant of Africa.
Cassava Smartech, a unit of Econet Wireless Zimbabwe, the largest company by market capitalization on the Zimbabwe Stock Exchange, is expected to begin trading next Tuesday (Dec. 18). Shareholders of Econet, which will continue to own 20% of Cassava, will be allocated shares in the spin-off in proportion to their stake in its soon-to-be former parent.
In spinning out Cassava, Econet says it wants to unlock value from a bundle of businesses that, with a breadth that mirrors the model pioneered by Chinese colossus Tencent, reaching into nearly every part of Zimbabwean life.
Those businesses include EcoCash, which dominates the country’s mobile money market. Eight in 10 adults in Zimbabwe pay with the service, which is patterned on M-Pesa, the mobile money service that dominates the market in Kenya.
The listing would make the latest in a series of initiatives by operators of mobile money systems in Africa to diversify their offerings in ways that mirror the success of Tencent’s WeChat messaging app, which combines messaging with such services as digital payments, ride hailing and e-commerce. Kenyan telecom operator Safaricom has added features to its M-Pesa mobile money service that allow users to chat while sending and receiving money and has also diversified with e-commerce and a ride-hailing service among others.
“M-Pesa was our model when we were developing EcoCash, but we have since moved on from there,” Darlington Mandivenga, Cassava’s group chief executive, recently told The Standard newspaper. “Our model now includes so many more services that M-Pesa does not offer. Today our approach is that of Tencent; we are more than just EcoCash.”
Mandivenga says Cassava is the largest private creator of jobs in Zimbabwe with a multitude of companies of various sectors from finance to education.
“Yes! This is a lot of companies!,” Strive Masiyiwa, executive chairman of Econet Wireless’s parent company, wrote in October in a blog post that discussed the company’s reasons for the spin-off.
Masiyiwa began the business 25 years ago and now ranks as Zimbabwe’s richest citizen with holdings that include half of Liquid Telecom, which operates Africa’s largest fiber-optic network.
Cassava generated about 30% of the $832 million in revenue that Econet earned in the fiscal year that ended February 28, and “doubles in size” every year, Masiyiwa noted.
“For many people, [Cassava] is a ‘hidden’ company because they see everything it does as ‘Econet, the mobile company,’” he wrote. “The fact is, our digital product and services business has operated independently from the telecoms company for years, with its own head office and board of directors.”
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