RBZ to pluck leaf from Nigerian banking experience

Shame Makoshori



A RESERVE Bank of Zimbabwe (RBZ) team will today leave for Nigeria to study the community banking system in that country as the central bank steps up pla

ns to bring financial services to rural communities.


RBZ governor Gideon Gono has said lack of access to financial services in rural communities was retarding development in communal areas.


RBZ sources this week said similar missions were conducted in Kenya and Ghana in the past month and officials were studying the findings.


They said after the Nigerian trip, the central bank teams would “pool their findings” and come up with a viable strategy for launching rural financial institutions.


West Africa has one of the continent’s most successful community banking projects.


However, the choice of Nigeria as a case study raises questions because the financial services industry in that country has been porous.


Last year there were plans to integrate Nigeria’s 89 commercial banks into 18 viable financial institutions to avert what was then seen as a possible crisis due to speculative tendencies in the sector.


Last month, Gono said 70% of Zimbabwe’s population living in rural areas had been denied the opportunity to benefit from well-packaged financial loans to support their economic activities.


He then proposed what he called “financial inclusion”, a programme that would spearhead the rural banking programmes driven by the Financial Inclusion National Taskforce to be set up by the central bank.


However, economists were sceptical this week about prospects for a successful rural banking programme in Zimbabwe.


They pointed out the tide of poverty sweeping across communal areas as a result of the government’s failure to provide critical agricultural inputs to both new and communal farmers as the single major obstacle to the success of the project.


Citing the Grameen Project in Pakistan, independent economist John Robertson said in Third World countries where rural banking projects were successful, the underlying objectives had been to lend financial lifelines to small-scale farmers for rural development.


“It is a brave hope but I do not think it will be practical because banks will incur more costs compared to the revenue they would generate,” he said. “Rural communities have been rendered poor by the government’s land reforms.”


Another economic analyst, Eric Bloch, said it was difficult to project the potential of the programme until the RBZ presented the finer details of their strategy.


He was however worried that the programme would be hastily implemented.