Darlington Musarurwa – Business Editor
WHILE the bulk of locals do not have access to formal banking services, it has since been established that an estimated 5,4 million people, or 77 percent of the adult population, have access to either formal or informal financial services, which is the fourth highest number in the Southern African Development Community (Sadc), according to a latest report.
The only countries that fare better are Mauritius, with more than 90 percent of its adult population financially included, followed by South Africa (86 percent) and Lesotho (81 percent).
Recent surveys indicate that the country’s adult population – those that are 18 years and above – stood at seven million by 2014.
Much of the services, however, are being driven by mobile money services, while subscriptions to formal banking services, particularly commercial banks, continue to decline.
According to a latest report entitled “An Excluded Society? Financial Inclusion in SADC through the FinScope Lenses”, which was produced by FinTrust – an independent trust based in Johannesburg, South Africa – close to 5 million people do not use financial services provided by commercial banks.
Only 2,1 million people; or 30 percent of the adult population, is actually banked.
Of the 5 million that are not banked; 3,7 million (74 percent) say they do not have the money to sustain the accounts, 28 percent do not have the sufficient balance and cannot maintain a minimum balance.
Seven percent actually complain that the bank charges are too high.
Most worryingly, it is estimated that more than 1,6 million people; or 23 percent of the adult population, do not use any financial services to manage their financial lives.
Most local depositors contend that the interest that is paid on deposits is low but bank service charges and interest on loans are relatively high.
But even for those that are banked, challenges still remain, as 16 percent (336 000) of the bank customers have to walk for more than one hour to the closest bank branch.
“In total, 30 percent of adults in Zimbabwe are banked. In turn, 70 percent of adults do not have or use financial services provided by a commercial bank.
“Uptake of banking products is mainly driven by transactional products (81 percent of those who are banked) and savings products (33 percent).
“The main reasons why people are banked is to keep money safe from theft (67 percent), to receive salary or deposit money from an employer (39 percent), it is an easy way to receive money (23 percent), and to get access to a loan (20 percent). People who are currently unbanked mainly stated monetary reasons those that are banked,” read part of the report.
Industry regulator, the Reserve Bank of Zimbabwe (RBZ), has been trying to persuade banks to levy accommodative interest rates and pay reasonable charges on deposits.
The Bankers Association of Zimbabwe and monetary authorities have since agreed to cap interest rates for the sector at 18 percent.
Zimbabweans heavily borrowed
Even though statistics further show that 3,3 million of the country’s adult population borrowed funds in 2014, only 4 percent of the debtors did engage commercial banks.
An estimated 30 percent was borrowed from family and friends and 10 percent were from non-financial institutions.
And far from the perception that locals mainly borrow for predominantly unhelpful consumptive pursuits, the survey actually notes that Zimbabweans mainly borrow for developmental purposes – loans to buy, build, renovate property or houses, start businesses, education – at 40 percent.
What is of concern however is that 10 percent of the borrowers did so to pay other debts.
The spread of mobile commerce
But perhaps the most interesting statistic that shows the pervasive and disruptive nature of the new phenomena of mobile money services, including the role that they have played in bridging the divide between the banked and the unbanked, is the number of people that are using mobile money services at 3,3 million; which is almost half of the adult population.
Part of the report reads: “Mobile money is well known in Zimbabwe, with 91 percent of the adult population aware of mobile money. 82 percent of the adult population comes from households that own one or more cellphones (and) about one in two (47 percent) adults in Zimbabwe use mobile money services.”
The growth of the mobile money platform was also recently captured by Postal Telecommunications Regulatory Authority of Zimbabwe (Potraz), which showed that the total value of transactions on mobile money platforms rose 16,3 percent to $533 million in the three months to December 2015 from a quarter earlier.
Currently, most of the mobile money transactions are pushed by the country’s mobile telecommunication companies – Econet Wireless Zimbabwe – which controls EcoCash; NetOne, which has OneWallet; and Telecel (Telecash).
Econet has more than 90 percent of the market in terms of market subscriptions, while Telecel and NetOne has 3,1 percent and 0,01 percent of the market in that order. Promoting the use of banks, plastic money
The RBZ has since embarked on a crusade to promote the use of plastic money and extend the reach of the banking sector to the unbanked.
Policy makers and economists are agreed that the increased use of financial services is healthy for both the fiscus and the banking public as it improves the country’s savings stock.
It also facilitates depositors’ access to financial services. Development experts say a minimum savings stock that is about 30 percent of a country’s gross domestic product (GDP) is critical for any economy as it helps the financial services sector to sponsor capital projects and re-allocate resources to sectors where they are needed the most.
With effect from March 30, 2016; all tobacco farmers are being paid through banks. The conditions have been relaxed.
Farmers only need to present their national identity cards and grower numbers in order to have their accounts opened.
It is hoped that a traceable footprint of transactions that will be created by the newly banked farmers will be used as collateral to unlock further financial assistance from the banks.