A comprehensive market assessment of retail financial services in Zimbabwe shows that mobile money operators are now dominating the finance sector. Banking activities appear to be on the decline due to workers’ low income and high unemployment in Zimbabwe.
Key findings of the Making Access Possible (Diagnostic) launched in the capital today shows that mobile money operators were the most trusted financial service providers and mobile money subscriptions had shot up by 72 percent from 3 million dollars in 2013 to 5.3 million dollars in 2014.
Banks, insurance companies, retirement funds, co-operatives and micro finance institutions were less trusted and more people were resorting to non-formal methods of saving money or used such entities when they were only paying school fees.
An official from one of the organizations which did assessment, Hennie Bester, Centre for Financial Regulation and Inclusion or Cenfri, said there was need for banks to change their business model if they are to regain ground.
“You cannot grow without banks because banks know about intermediation so stop tying banks around their ankles,” said Bester.
“You need mobile yes, you absolutely do but we’ve got to change our mindset about how we go about it.”
Finance Minister, Patrick Chinamasa concurred saying Zimbabwean banks must accept the change that has taken place in the economy and adapt to the prevailing situation.
He said most of Zimbabwe’s economy is now informal and local banks should find a strategy of including the informal sector into the financial sector.
Government estimates that more than 3 billion is circulating in the informal sector.
According to survey, only 24 percent of the seven million adults in Zimbabwe have bank accounts.
Some Zimbabweans are complaining that banks are charging high interests and normally demand a lot of documents for one to open an account and cited this as a reason they preferred mobile money services such as EcoCash and TeleCash.
One such resident is Simplex Manhando who tells Studio 7 that mobile money operators are flexible and hassle free.
Zimbabwe Cross Border Trader Association secretary general, Augustine Tawanda, also said though they are relying on mobile money operators they are negotiating with banks so that their members can be included in the formal banking system.
He said mobile money operators’ charges are higher than those set by conventional banks.
Bester said the huge trust that Zimbabweans have in mobile money operators, shows that there was no deposit protection for individuals and no recourse for them.
He also noted that the country does not have regulations governing their operations.
The assessment done by the United Nations Capital Development, Cenfri and Finmark Trust is aimed at assisting the government in identifying key priorities and opportunities to extend financial services to the unserved or under-served sectors of the economy.