While there is plenty talk about the importance of using technology to develop solutions to real world problems, coming across a development that is truly innovative is quite rare. However, that is exactly what the Zing Group have accomplished, creating a genius solution to a very specific problem.

That problem is that there is a large community of 3.5 million Zimbabweans living in South Africa who need to send (remit) money home to support their family and pay for essentials, such as electricity and school fees. But, explained Warren Venter, the chief customer officer at Zing Holdings, one of the only ways to do so is through formal remittance processes, which are some of the most expensive in the world, with remittance fees costing 16% in theory, and as high as 40% in practice.  

Breaking barriers

To give a scope of the problem, he elaborated that of those Zimbabweans living here, those that are banked are remitting $785 million dollars a year across the border. The majority though (70%)  aren’t banked, and for them the problem is even greater, leaving them having to resort to sending cash across the border in taxis, a risky proposition at the best of times.

“We realised that there is massive opportunity for us to bring down the barriers to transacting,” he explained. And that is exactly what the company has done, developing an app, and a kind of virtual currency it calls Ama.Zing Coins, that enables those living in the Zimbabwean diaspora to transact in a far safer way, without a bank account. The coins are pegged to the US dollar, giving them an intrinsic, unchanging value, with each coin equaling one US cent. This, explained Venter, enables the coins to be transacted from within their free app, that simply requires your full name and cellphone number, without the onerous demands of FICA or RICA.

Innovation in action

Users can either buy coins in the app itself by linking their bank account, for those who have an account, or alternatively buy Ama.Zing coins for cash at one of the 100 000 stores around the country for those who are unbanked. At present, this includes Pick n Pay and Pep stores, and, at the time of writing, the Massmart (Game, Makro, Builders Warehouse) branches were due to come onboard within the week as well.

Once bought, these coins are stored in a coin based mobile wallet on the user’s smartphone, which can be sent on to one’s family across the border from the app. Users then redeem those coins for products and services in Zimbabwe in app for free.

“With the app, users can buy electricity, airtime, insurance, or they can pay outside of the ecosystem, such as a landlord or a school. On the basis of that you give us the instruction to convert your coins, our company in Zimbabwe converts the user’s coins into cash and pays their landlord, for example,” he elaborated. The transaction fees on that are minimal, at 3%, a far cry from the 16%-40% that have become the norm.  

Benefit bounty

Using Ama.Zing coins has another benefit though, as those working in South Africa can control not only their spending, but who is actually being paid. “One problem that Zimbabweans have is that they send the money across the border but it doesn't go to the school fees, because the person who received the money spends it on something else, and then school fees, for example, remain unpaid,” he noted.  

Even for South African residents, the coins can be used to their advantage as well. One typical scenario is allocating a portion of their Zimbabwean domestic’s salary as coins, earmarked for the school fees of dependants who are still in Zimbabwe, with their domestic’s approval.  

Furthermore, it also offers South Africans a way to engage in social good more conveniently, potentially ‘adopting’ a family in Zimbabwe and paying a portion of their electricity meter, for example.

While the pilot is being rolled out addressing Zimbabweans in particular, its use is not limited to that country alone. Rather, there are plans afoot to make it similarly available to the Malawian diaspora, who face the same challenges as their Zimbabwean counterparts, likewise working in South Africa and struggling to send money back home to their families.

Breaching borders

As well, Venter enthuses that the Ama.Zing coins can also be deployed in other countries, such as the UK, or US, similarly for those Zimbabweans who are living abroad and still need to remit money home.

On its own, solving the problem of remitting money across the border would be enough. Yet, the solution addresses another issue as well, that of life insurance.

He elaborated that users can download and use the app for free, or alternatively opt into a Gold membership programme, which costs $5 a year. With that though, users get $200 of life cover on the life of a family member in Zimbabwe for the year.

“Typically what happens is that a family member dies in Zimbabwe and the family still has to pay the funeral costs. Now someone living in South Africa can insure their family member's life in Zimbabwe, in the event of them passing, the family can get paid out to cover the funeral cost, instead of having to take the money they weren’t expecting to spend and move it across the border to pay for the funeral,” he continued.  

Rewards for all

Furthermore, by spending $50 in the app, regardless of whether the user is on the gold membership programme or not, grants them free life insurance of $200 for the following month.

We believe that the insurance value proposition is so strong, that we give it to users. This will build a use case around the value of insurance, and as people start claiming on the insurance and realising its value, the insurance element will elevate as a bigger priority,” he enthused.  

Beyond solving a particular problem, the innovation has strong social good connotations as well. Along with providing transactional and insurance access for those who are outside the conventional banking system, the impact of reducing the cost of remittances globally could make a significant different. Venter points out that the total remittance market worldwide is $575 billion a year, of which $427 billion is accounted for by emerging markets, including South Africa.  

“If we could reduce the cost of remittances globally by 5% in terms of transaction fees it would make $16 billion difference. If that money was put into the hands of the those who were meant to receive it, could you imagine what they could do in terms of buying products and services, driving services and improving their lives?” he posited. It would not be hyperbole to assert that the results would be, well, amazing.