Betting against Cassava Smartech’s Sasai

Cassava Smartech, an Econet spinoff, recently launched Sasai, a mobile application which mirrors China’s WeChat. Of course it is a first by Africa but odds are highly staked against its success. There is ready intense competition in the chatting space with statistics showing that in Africa’s strategic countries of South Africa and Nigeria, Whatsapp usage is so entrenched, so is the rest of Africa.

Opportunities are ready in the ready in the payments space, but MTN, which is due to launch its own version of WeChat, stands a better chance of gaining traction and market dominance due to scale and brand equity. Even so, WeChat has intensified own efforts to expand and increase its value proposition on the continent.

Broadly internet adoption on the continent remains very low compared to the rest of the world. These are some of the key factors which will militate against Sasai’s success.

Sasai is an African region focused instant messaging application but with much more functionalities most notably, payments and an exploration platform. The payment functionality allows users to transfer money to and from users on the same platform, withdraw money on select payments platforms, as well as make payments for goods and services.

The exploration functionality partially interlinks with the payments functionality as users can purchase applications, books, pay for online streaming services, download apps within the app, among other services. The application was launched in Zimbabwe a few months ago, a country which gave parent Econet, the clout it commands in the mobile telecoms space, even as some of its off-springs such as Ecocash and Steward Bank, now all housed under Cassava, have outshone the market.

But of course, the Econet group has suffered defeats before especially on products that tend to focus on the continent and not the micro-market of Zimbabwe. In 2018 Econet was forced to shut down loss-making and uncompetitive pay TV Kwese which had ambitiously sought to dethrone Naspers’ DSTV as the market leader on the African continent.

Although it amassed a fair share of subscribers, it fell short on numbers, which is what defines a pay TV channel. The case may now be different from Sasai, which is inhouse built and has relatively lower running costs, with minimal limitations such as payment regulations and integration costs.

However, the aspect of scale is still paramount to increase the value proposition. Messaging applications thrive on suction effect and the larger the ecosystem the quicker the growth. To generate numbers, there has to be a fair share of early adopters and these are normally drawn by either brand equity or a strong value proposition.

For example, one will ask what incremental value do they accrue, if they have to forgo an application such as Whatsapp where most of their friends are, on jumping to Sasai. If Payments is the value proposition, it also has to be more clear what savings one makes from transacting within Sasai compared to say direct Ecocash transacting on the mobile wallet. Either way, the value proposition has to be very strong because chatting on its own ranks on top in terms of the hierarchy of subscribers’ needs.

Sasai’s success will be tested on the domestic front in Zimbabwe, where it enjoys strong brand equity and leverages on Group synergies. Zimbabwe has a more favourable internet penetration level compared to the region. It equally has a higher mobile internet and specifically high social media usage.

High adoption of mobile money has catalysed financial inclusion in light of cash scarcity, positing the market as fertile for escalated online payments. Traditional brick and mortar banking are dwindling even before the rural market is saturated. But smartphone adoption among the rural folk will continue to increase at a very slow rate, while affordability is dampened by a worsening economic environment, thus dampening the expected growth rate, although this may only be a short term constraint.

The local economic landscape may tilt in the mid-term, but the timing of the product’s release was also very wrong. Data cost is going up as frequent beyond affordable levels, forex scarcity has intensified meaning topping one’s international credit or debit cards gets to be more difficult.

The same can be said for local currency scarcity, which has limited Ecocash’s services to only a money transfer platform. The Econet magic of 1998, which saw the company going for a listing despite the emerging economic turbulence cannot be replicated here.

The times have changed and the underlying conditions also very different. Back then Zimbabwe had no effective mobile telco offering, which means there was a strong propensity for growth. the same can be said for Ecocash in 2011.

On the continent, parent Econet has a foothold on broadband via Liquid Telecoms, but lags in terms of mobile telco due to limited geography coverage. Mobile telecom companies with dominance in Africa’s most populous and industrious economies of Nigeria and South Africa are better placed to take a lead in the combined chatting and payments market and one provider MTN is already making headway in that space.

MTN announced plans to launch the instant messaging app in March 2019, which expected to roll first in its West African markets before expanding to other 17 markets where it has ready presence through mobile money and voice. In these markets which include South Africa, Nigeria, and Asia, MTN has a combined 235 million.

Global leader, WeChat’s success was curved on China’s closed economy which restricts other popular Western applications such as Whatsapp as well its high population, factors that are not inherent in Sasai. As internet adoption increases, Payments as a solution is highly becoming sought after and players such as Paypal, Alipay are reaping big.

Facebook’s Libra, if it sees the light of the day, could be very disruptive. Sasai had better chances of succeeding had it focussed more on the payments space in isolation, integrating all payment systems in Zimbabwe including API’s for banks, Ecocash, and even remittance services, but the chatting space is always tempting, given its ability to lure customers. There is a clear ambition on Strive Masiyiwa’s side to bring in a block buster product that could shutter the global space and position it as game player among the giants, but Sasai will not be the one.