Rise in cash transactions…as Zimbabweans shun banking sector

15 Dec, 2015 - 00:12 0 Views
Rise in cash transactions…as Zimbabweans shun banking sector

The Herald

Conrad Mwanawashe Business Reporter—
MORE than 80 percent of local transactions happen in cash as Zimbabweans continue to shun the formal banking process while more than 25 percent of bank accounts are dormant. According to a new survey titled “Making Access Possible (MAP) Diagnostic” conducted in Zimbabwe mobile money subscriptions grew by over 100 percent in the last two years as they are more preferred than banks for transactions.

MAP is a comprehensive market assessment of retail financial services. Its purpose is to assist the Government to identify key priorities and opportunities to extend access to financial services. The MAP framework has been developed in partnership between Cenfri, FinMark Trust and the United Nations Capital Development Fund.

Presenting the findings of MAP Diagnostic yesterday Cenfri technical director Mr Hennie Bester said mobile money subscriptions recorded a 72 percent growth in 2014. He said banks’ contribution to financial inclusion has declined and this calls for business model changes for banks to regain ground.

The survey showed that retail banking has continued on a downward trend. “Banking pricing model will kill them in this environment. There is need for mind shift in the banking sector,” said Mr Bester.

Finance and Economic Development Minister Patrick Chinamasa echoed the findings of the survey on the banking sector. He said while there has been a structural shift in the economy from formal to informal, banks have “not yet put their act together”.

“The banking sector has no idea on how to handle the informal sector. They do not have strategies. It has never happened to them. We must find strategies to supply this demand. This survey will give us key findings on the basis of which we can make informed policy in order to root this sector as the mainstream of the economy,” said Minister Chinamasa.

The survey shows that the payments and mobile money platforms now dominate financial inclusion landscape. It showed that declining income and employment depress use of formal financial services while informal financial services soaring as communities act collectively to survive.

Financial inclusion is a key policy objective for both the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe as it is consistent with the goals of Zim-Asset. Minister Chinamasa said financial inclusion refers to the delivery of financial services

and products in a way that is appropriate, accessible and affordable to all segments of the population. “The intention is to unlock the social and economic potential of marginalised groups by empowering them to participate in formal financial markets.

It is an enabler that allows for progress towards our poverty reduction goals, economic and job growth, women’s economic empowerment and health protection in addition to increased agricultural production,” said Minister Chinamasa.

He said the results of the survey will provide Government with a basis for effective policy implementation in order to increase financial inclusion and ultimately maximise welfare and economic development gains.

Some of the options the survey presents to extend financial inclusion include focusing on driving financial inclusion and facilitating transaction based revenue for banks. Mr Bester said the survey showed Zimbabwe had caught the “Dutch disease” which undermines credit but drives payments leading to weak exports against strong imports.

The Dutch Disease is “the deindustrialisation of a nation’s 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, increasing imports and decreasing exports”.

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