Zim incomes decline

via Zim incomes decline – NewsDay Zimbabwe December 15, 2015

ZIMBABWE’S incomes have been on a decline from 2011 to 2014 and mobile money operators now dominate financial inclusion in the country, a latest report on financial inclusion has shown.

BY VICTORIA MTOMBA

The average incomes for Zimbabwe have declined to $134 in 2014 from $143 in 2011, meaning more people are sliding into poverty.

Speaking at the launch of the Making Access Possible stakeholders workshop yesterday, Centre for Financial Regulation and Inclusion director Hennie Bester said the declining incomes have depressed the use of formal financial services.

“Banks contribution to financial inclusion has declined and the banking sector business model change is required for banks to regain ground. The mobile money platforms now dominate payments and Zimbabwe has moved faster than Kenya in mobile money.
Zimbabwe uses EcoCash not just for transactions, but as a primary and savings platform ahead of Kenya,” he said.

Bester said the country was experiencing a Dutch disease, which is referred to as the deindustrialisation of a nations’ economy that occurs when the discovery of a natural resource raises the value of the nation’s currency, making manufactured goods less competitive with other nations, therefore, increasing imports and decreasing exports.

According to the report, 38 400 loans were offered to individuals last year and that micro-finance institutions (MFIs) are not significant in Zimbabwe for financial inclusion because they have limited access to capital. The report showed that people trust mobile money operators more than banks because they haven’t lost money so far through that system.

Finance minister Patrick Chinamasa said the report was an eye opener, as Treasury was putting more effort to revive MFIs as a means for financial inclusion and the report was suggesting otherwise, hence government will go back to the drawing board.
“You have confirmed the capacity of commercial banks to adapt to change. Clearly they are not adapting, my misgiving about this sector is they are like ostriches, sinking their head in the sand and are not giving attention to what is happening around them,” he said.

Chinamasa said the balance sheet of most banks was skewed towards bank charges and not from interest income indicating that they were lending less and less.

The informal sector employs over 75% of the population in Zimbabwe, but it is financially excluded due to various challenges rigidities of the financial services sector.