ECONET Wireless is on the verge of concluding negotiations with Cell Insurance to underwrite its new insurance product as the mobile phone firm turns to value-added products to grow revenue, sources close to the deal have said.
The development came at a time when the Insurance and Pensions Commission (IPEC) recently launched an investigation on Zimbabwe’s largest mobile phone company concerning the structure of EcoFarmer.
EcoFarmer is a microinsurance product that provides crop cover against bad weather conditions to registered farmers.
“Cell Insurance is the partner that Econet is engaged with for EcoFarmer,” the source said.
Addressing journalists at a Press briefing last week, Econet chief executive officer Douglas Mboweni said a deal with an unnamed insurance company may soon be sealed.
“We are still in discussion. We are working with somebody on the product,” Mboweni said.
He could not give the name of the firm that the company was engaged with.
“We cannot say much about the discussion we are engaged in,” he said.
IPEC commissioner Manett Mpofu told our sister paper NewsDay recently that the telecoms company was being investigated on grounds of offering a microinsurance product without a licence.
Mpofu said the telecommunications company was not licensed to offer insurance services in terms of Section 7 of the Insurance Act.
“With respect to their weather index microinsurance product (EcoFarmer) advertisements in the print media, it is not clear from the same advert whether Econet Wireless is the underwriter of the product or a duly registered insurance company using their mobile platform to offer the product.
“Meanwhile, investigations into the matter by the commission are underway,” Mpofu said.
According to the company’s financial results for the six months ended August 2013 the group posted a $70,5 million after-tax profit for the period under review, down from $78 million in the first half-year due to increases in finance costs.
Finance costs increased to $18 million in the six-month period from $10 million same period last year.
The company’s interest charges rose by 75% compared to last year as the company secured a multi-lender facility of $317 million.
EcoCash had surpassed the $2 billion mark and there are 14 banks on the platform, while the company has 7 000 agents countrywide.