ZIMBABWE has the second most stringent restrictions in financial services trade, a latest United Nations (UN) report on economic development in Africa says.
The United Nations Conference on Trade and Development 2015 report launched in the capital last week by Economic Planning and Investment Promotion minister, Simon Khaya Moyo, also reveals that financial services trade restrictions in Africa are pervasive.
Finance trade includes such activities as lending, issuing letters of credit, factoring (the business of purchasing and collecting accounts receivable or of advancing cash on the basis of accounts receivable), export credit and insurance.
Those involved in financial trade include importers and exporters, banks and financiers, insurers and export credit agencies and other service providers. Financial services are the economic services provided by the finance industry.
Zimbabwe’s position has not improved since a similar survey was published, largely because of policy and regulatory shortcomings. The country’s financial services sector remains under-capitalised and constrained by a stubborn liquidity crunch.
“The restrictiveness of trade in financial services varies widely among African countries and is highest in Ethiopia, Zimbabwe and Egypt. Zambia, Mauritius and Morocco have among the most open services trade regimes in the world,” reads the report.
The report shows that restrictions are mainly caused by policy and regulatory shortcomings which inhibit the growth of the financial services sector in the African countries.
“A well-functioning financial system is critical to Africa’s long-term growth, the financial sector can promote economic growth, stimulate investment and contribute to poverty reduction,” the report says.
Moyo said the report requires Zimbabwe to conduct self-introspection and compare itself with other countries in terms of performance of the services sector as well as policy differences.
The report says the formal financial sector in Africa performed poorer during the period 2009-2012 as monetary resources mobilised by the sector were 42,1% on average compared with 76,5% in other developing countries, with a world average of 72,3%.
Between 2009 and 2012 the services sector reportedly accounted for 32% of total employment in Africa.
The report recommends that African policy makers should place greater emphasis on how to move towards the provision of more sophisticated services where there is greater value addition, opportunities for technology transfer and linkage development with other sectors of the economy.