RBZ targeting national financial inclusion of up to 90 percent by 2020

RBZ Chief, John Mangudya

RBZ Chief, John Mangudya

THE Reserve Bank of Zimbabwe is targeting national financial inclusion of up to 90 percent by year 2020 from 69 percent as part of efforts to foster economic and social development.

Officially launching the National Financial Inclusion Strategy on Friday RBZ governor  John Mangudya said it was important that Zimbabwe pushes for higher financial inclusion as it was one of the drivers of economic growth.

“We cannot increase fiscal space when key players such as smallholder farmers, women, youth, micro-small to medium enterprises are outside the formal banking system.”

The development and implementation of the NFIS is aimed at ensuring the existence of an inclusive financial sector that broadens access to and use of financial services by all with the view of endangering social and economic development.

The last FinScope survey showed that 23% of Zimbabwe’s adult population was financially excluded, only 30% made use of banking services while only 14% of MSME owners were banked, 43% did not use financial products or services and only 1% of the adult population have access to capital.

This is despite the fact that Zimbabwe has high literacy rates.

Further to that, 70% of the people reside in rural areas while 76% of the adult population earns $200 a month or less.

Bankers Association of Zimbabwe president Sam Malaba said under the current circumstances where people earn less there was limited scope for savings. “This is a reminder of the underlying need to grow the economy and reduce income disparities for sustainable gain in financial inclusion.”

However due to the increase in cellphone banking, 69% of adults had access to financial services in 2014.

The Minister of Youth Development, Indigenisation and Economic Empowerment, Patrick Zhuwao compared the country’s banking institutions with dinosaurs due to their failure to quickly adopt new technologies to attract population categories such as the youth to use banking systems.

Finance and Economic Development Minister Patrick Chinamasa said improving financial inclusion would not only boost the country’s savings but assist the majority of the population to access funding which will enable them to exploit available business opportunities.

“Because of the shifting structure of our economy from formal to informal, banks cannot afford to be left behind in this new economy,” Chinamasa said.

“To do so will be to bury your heads in the sand.”

Mangudya said the policy will be premised on four pillars; Financial innovation, financial literacy, Consumer Protection and Micro-Finance.

Director of Bank Supervision at the RBZ Norman Mataruka said the goal is to increase the level of access to formal financial services within the country to 90% by 2020 from 69% and to increase the proportion of banked adults to at least 60% by 2020 from 30%.

He said the strategy identifies key priority areas and some strategic indications.

Secretary in the SME’s ministry Evelyn Ndlovu said that in order to fully licence MSMEs, they were in the process of engaging stakeholders with a view of creating a formalisation strategy. A draft Savings and Credit Cooperatives Bill had been drafted and will clearly define the role of the RBZ in ensuring security of funds and that operations are
in line with the country’s monetary policy.

She also said that the ministry was currently reviewing the Cooperative Society Policy and Act in order to align it with current economic conditions.

“Some of the current challenges being faced by cooperatives include lack of access to credit facilities, specialised knowledge and expertise and high interest rates and bank charges.”

The Small to Medium Enterprises Development Corporation will need to be capitalised in order to reach out to the targeted MSMEs sector. “Efforts are currently underway to capitalise SMEDCO through the formation of a micro-finance bank.”

The ministry has also created a MSME revolving fund although it is undercapitalised.

Malaba said on-going financial inclusion initiatives include; opening new low cost accounts for the low income and simplifying risk based KYC requirements, setting up agencies and branchless banking outlets and increase presence in the rural areas.

Malaba however added that for the strategy to be successful, it is imperative that agriculture in particular agriculture irrigation infrastructure be given the highest priority in resource allocation.

The RBZ has set up key thematic areas and these include SME’s Finance and Development, Women, Youth, Rural and Agricultural Finance, Digital finance, Financial literacy and consumer protection, Insurance and Capital markets and Microfinance FinX

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