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Stumbling blocks to sustainable financial inclusion in zimbabwe

According to the World Bank Group, only 23% of the adult population in Sub-Saharan Africa have bank accounts and the FinScope Consumer Survey of 2011 states that only 24% of Zimbabwe’s adult population is banked.

The recently announced National Financial Inclusion Strategy (NFIS) by the Reserve Bank of Zimbabwe is a coda to a prolonged fight against exclusion. Financial exclusion is distinctively corrosive as it has all the qualities that can trap people in poverty. This is the reason why many scholars and researchers have gone beyond the standard definition of financial inclusion as mere access of financial services but a process of equity in financial services provision centred on reliability and affordability.

By Ngonidzaishe Makaha

According to the World Bank Group, only 23% of the adult population in Sub-Saharan Africa have bank accounts and the FinScope Consumer Survey of 2011 states that only 24% of Zimbabwe’s adult population is banked.

The NFIS is driven by the ambition to achieve 90% national financial inclusion by 2020 but a lot of structural issues can hinder any progress towards this ambitious target. Having established that the definition of financial inclusion is equitable provision of financial services that are affordable, accessible and reliable, we can contextualise it to Zimbabwe and put it under a litmus test.


Financial institutions in Zimbabwe have a wide range of mediums they use to provide their services to customers.

Most banks are still entrenched in the brick and mortar model but the imperilling entry of mobile money in the financial services sector has driven a few banks to adopt such technologies as SMS and internet banking.

In terms of accessibility, it can be largely argued that the diverse coverage of bank networks and the mere fact that close to 90% of the total population have a mobile phone that they can still use for banking services renders the country as being more accessible to financial services.

However, limited issues such as complex paperwork when opening a bank account remain a hindrance.

The cost of transacting through a bank or a mobile money services provider remains prohibitive. This is the main reason why most Zimbabweans have shunned the mainstream financial system. There is no substantial reward on saving through a financial institution as the small interest is wiped out through other charges that may accrue thereof.

Confidence in the financial system is a phenomenon embedded in fragility. Even the world’s largest financial markets felt it during the Great Recession of 2007-2009 when economic agents started pulling out their investments and savings.

In Zimbabwe, more than 10 commercial banks have folded since 2004 and this has resulted in an affective outlook on financial service providers by the depositors. This litmus test posits Zimbabwe’s financial sector as one which is accessible, mainly as a result of mobile money services, but expensive and unreliable.

In essence, it can be argued that, inasmuch as banks are scattered across the country and mobile money has revolutionised payment systems, there is no sustainable financial inclusion in Zimbabwe. The stumbling blocks to financial inclusion in Zimbabwe include cost, fragile economy, financial sector resilience, financial literacy and lack of financial innovation.

Banks, the world over are known to make a chunk of their income through loan provisions and investments in derivative and capital markets. Zimbabwe is an exception especially after the adoption of the United States dollar in 2009, where most of the banking institutions obtained the chunk of their income through transactional charges.

This has kept a lot of small to medium enterprises, co-operatives and individuals out of the mainstream financial system because the costs of banking services are just unbearable. Micro-finance institutions have not come in with a complimentary role but rather an opportunistic one where their costs structures are even higher than those of banks.

The same applies to mobile banking, where despite all the talk around convenience and reliability transactional costs remain high.

Fragile economy

In a fragile economy where incomes are low, not many economic agents seek the services of financial institutions to save or invest. Inversely, very few financial institutions are willing to loosen up on credit provision because the probability of default is invariably high.

Financial sector resilience

When seeking financial services, individuals and corporates are rational enough to scrutinise the type of financial institution they are about to enter into a relationship with as well a general industry analysis. The financial sector in Zimbabwe is quite fragile as evidenced by the frequent bank closures. The fact that there is no confidence in the financial system is another clear case that drives people away from seeking mainstream financial services.

Financial Literacy

Inasmuch as there is a lot of education about using mainstream financial services, there has not been much emphasis on other mediums that people can use and derive financial inclusion benefits. Such include formalised Rotating Savings and Credit Associations and investments in capital markets. The generality of the population is ignorant about these mediums mainly because there has not been much discussion about them.

Lack of financial innovation

Mobile money service providers have done much on the part of financial innovation but mainstream banks have lagged behind and in the process failed to offer financial products that suit the economy and the customer. As a result, this has exacerbated the persistent shunning of banking services by most individuals.

If the NFIS is to be achieved by 2020, there has to be a conduit that is clear of the stumbling blocks stated above. Financial exclusion is corrosive to livelihoods and the economy and it is essential to fully implement financial inclusion strategies that guarantee not only accessibility, but reliability and affordability as well.

Makaha is a banking and financial consultant. These New Perspectives articles are coordinated by Lovemore Kadenge , president of the Zimbabwe Economics Society (ZES) email kadenge.zes@gmail.com, cell +263 772 382 852

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