Informal sector, MSMES needs more than just money

The economic situation in Zimbabwe has forced business people, individuals to focus more on looking for money to solve their perennial problems emerging on a daily basis. In my own view businesses needs more than just money for them to survive in this environment. The first step is to encourage formalization through educating the sector in areas such as registration compliance, human resources, marketing, operations, accounting, management, law and micro insurance. Regulators have a critical role in encouraging businesses to be compliant through setting policies that encourage growth and not discourage them.

Financial institutions are injecting more money into the sector because it is believed that that’s where a big chunk of cash is circulating; with to date, more than 150 registered lenders offering loans. If these institutions only focus on disbursing money and ignoring other needs of the market soon the sector will be over borrowed and nonperforming loans will cripple lenders.

Injecting money into a business is not a bad idea but not a guarantee of profits or survival. For a small business to remain profitable they need more than just money.

Thank you for reading, the writing is based on my personal opinions, therefore, comments and others views are welcome.


[Written by Tavonga Mhembere]

It’s interesting to note that informal sector has managed to take a lead in Zimbabwe; it is now being rated as the largest employer and driver of the economy, some statistics shows that more than 95.4% of the 6.3 million people defined as employed are working in the informal sector. A few couple of years before people who worked in the informal sector where looked down upon due to the nature of their jobs, and literacy level. However today someone who is working in an informal business is now respected as the master because they are now in control of cash. A normal formal business is hardly recording sales but a trader in Mbare, is realising thousands of dollars cash sales daily and this has forced micro-financiers, banks who used to shine against informal sector to start extending financial assistance to the informal sector.

However for this sector to succeed the pillars of financial inclusion being driven by the central bank must be explained well to this sector in a way. Financiers must not only look at the current green light of cash circulating in the sector but must find ways on how to make this sector more sustainable and formalised because there is a risk that in the near future all money circulating in the informal sector will be drained away and will fail to come in the sector again. Some of the tools that can be adopted to turn around the informal sector include:


Too much dependence on cash will soon crumble the informal sector, most traders still believe they have to see actual cash in hand or transact with cash. A quick adoption of mobile money and use of banking platforms may improve the efficiency of the sector and as well boost their sales. In today’s age business models that work for businesses to remain sustainable and competitive must be technologically driven. Not only technology is required in payment system but also in other operations such as savings, insurance, marketing, research, networking and record keeping. The use of technology may help SMES to have financial trail record and they can use it when accessing funds from lenders and lenders as well can design systems that can link them easily with the informal businesses.

Education Literacy

Most SMES are failing due to lack of proper accountability and management systems. Government, stakeholders must put in place courses, training and workshops that encourage traders to enrol and learn how to successfully manage and run their small businesses. This information will help them to conduct proper record keeping and as well do business strategic plans, gone are the day’s businesses were operated blindly without proper systems and one of the reasons why this is important is to enable smooth communication and interaction with the formal sector.

In conclusion, it is my opinion that a well coordinated informal sector will not only help players but will help the nation at large through employment creation, income through taxes and will create a complete ecosystem with the formal sector

Written by Tavonga Mhembere in his own view and capacity your views and comments are welcome


Happiness Tips

In all situations live your own life and be honest with yourself, mistakes are never meant to destroy you but to build you if you lie to get something, one day it will catch up with you and your lies will expose you. Be confident of yourself and always know each time you lie you are fooling yourself not the person next to you.

  • If you want a perfect house build one
  • If you want perfect menu, prepare one
  • If you want a perfect wife, nature one
  • If you want a perfect job, work for one


It’s as simple as that.. stay inspired by #inspiredbytavonga

Involving the unbanked through financial inclusion

Written by Tavonga Prosper Mhembere

By definition financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged sections and low-income segments of society. Some of the tools used to reach the low-income segment are what is seen currently happening globally that is the use of digital money platforms provided by banks, telecom companies, fin tech institutions.

Currently Zimbabwe has recorded an increase in use of digital money and the main reason pushing it is the current cash crisis and this kind of adoption has forced many people to use digital money as just available means of transacting and ignoring other purposes or even understanding how it works and its purpose or impact to the society, this is the reason why we see the same people who are banked  are the ones mainly using it yet one of financial inclusion goal is to involve mainly the unbanked. Service providers need to have this in mind when designing and launching their products to accommodate also those unbanked with or without income for them to appreciate the use of digital money so that they are part of the ecosystem and not only at the end of the system to just receive money and cashing it out.

According to the Reserve bank 2017 monetary policy we have 8.9 million registered subscribers across the country while 3.3 are substantive active, clearly as numbers are showing there are 5.6 million subscribers who are not actively participating, without much going into census Zimbabwe rural population is higher than urban, therefore from this you can easily tell that of the 5.6 million subscribers greater percentage is in urban areas and already banked. One of the main reason that causes high number of inactive subscribers is that service providers force people to register without clearly explaining to them use, maybe person registering clients is just an agent who is more worried about increasing his or her commission, this is the reason why we see there is high rate of fraudulent activities as some are registered without even an ID.  Another scenario is people from rural areas on their one off time visit to town they meet an agent registering and the agent persuade them to register without fully explaining maybe to get a client the agent only convince a client to register to receive free $1 airtime from the service provider. Last but not least not forgetting that low-income earners are failing to transact constantly because of unavailability of adequate and constant income and this can be witnessed by the researches done that on average low-income earners are surviving with an average of $2 per day.

All service providers need to involve and educate the unbanked society through some of the following ways.

  • Service providers must not copy and paste some technological models or solutions to the nation without first doing a market research and see what are the real challenges unbanked society facing and what possible solutions do they deserve because some of the solutions are failing to work in our society because they were not specifically customized to the problem we are currently facing.
  • Improving infrastructures, equal access to POS,  internet, and technology in rural areas
  • Reduction in transaction cost, this can be attained through infrastructure sharing, most low-income earners transact small amounts, therefore, it has to be economic for one to transact.
  • Advertising on radio chances is high that you are only reaching those who are banked and financial literate already because in rural areas those who afford solar systems and radio mostly have a background of urban life. Direct marketing to the unbanked, more investment must be done to reach low-income earners, through field marketing
  • Design financial products that benefit low-income earners, for example, insurance, medical aid, access to credit,
  • Digital money campaign awareness in villages through headman and chiefs to improve financial literacy
  • Increase agency representation in remote areas and educate people

Thank you for reading, the writing is based on my personal opinions, therefore, comments and others views are welcome.

Mobile money will transform Zim banking

MOBILE financial services are taking Zimbabwe’s banking sector by storm, riding on a high mobile penetration rate and the cash crunch.

With a mobile penetration ratio of 94,3 percent as at August 31, 2016, Zimbabwe is highly-regarded in terms of use of mobile devices in Africa.

As cash shortages persist, the banking public is increasingly finding mobile financial services more convenient and less risky than those of traditional banks.

In the absence of a lasting solution to the country’s cash challenges, it would probably be worthwhile to explore how mobile money can be exploited to ease matters.

These factors, combined with the increasing in formalisation of the economy, will lend credence to the growth of mobile money ahead of traditional banking services.

As such, traditional banks should brace for tough competition from mobile financial services providers.

Banks really have to shape up.

Data from Postal Telecommunications Regulatory Authority of Zimbabwe and the Reserve Bank of Zimbabwe, including a 2015 Finscope Survey, reveals that mobile money has established its place in the financial services space.

The stats also show the immense potential mobile money services have to transform banking in Zimbabwe.

The phenomenal growth in transactional volumes recorded by mobile money since dollarisation is an indication that this payment platform is increasingly gaining popularity.

In 2016 mobile money payments accounted for 81,2 percent of all electronic payment transactions.

Other platforms, namely POS, ATMs (3,4 percent), RTGS (0,8 percent), Internet transactions (0,3 percent) and cheque transactions (0,1 percent) handled the balance.

The increasing popularity of mobile money is notwithstanding the fact that it continues to lag behind RTGS in terms of transactional value.

In 2016, RTGS pushed transactions worth US$48,1 billion, or 77 percent of all payment values, while mobile banking stood at US$5,8 billion, or 9,4 percent of payments.

These statistics largely reflect the preference of mobile money for small transactions as it can easily reach the unbanked population.

Importantly, ZIPIT mobile banking is a formidable force that threatens to dislodge the dominance of RTGS transactions.

Finscope attributes the increase in financial inclusion – a measure of the proportion of the banked population -from 60 percent in 2011 to 77 percent in 2014 to the various mobile banking services spawned by the three mobile operators – Econet, NetOne and Telecel. GetCash is now in the mix.

These operators are relentlessly innovating and improving their payment platforms.

It is reported NetOne will soon be relaunching OneWallet.

The Finscope survey estimates that 45 percent of the country’s adult population (3,25 million) was registered with mobile money platforms in 2014, which compares favourably with 2,1 million, or 30 percent, of the adult population with bank accounts.

Therefore, an opportunity exists for mobile financial services to tap into the 55 percent market that is currently unexplored.

Of the registered mobile money users, 80 percent use it to remit money, whilst 46 percent use it for transactional purposes such as paying bills and making purchases.

Of the adults who claim to remit money, 83 percent use formal channels like banks, mobile money, and other money transfer options like MoneyGram, Mukuru and Western Union. Only nine percent still use bank remittances, while 17 percent claim to use informal channels like buses.

What is more interesting is that 74 percent of the unbanked professed that they don’t even need a bank account.

The increase in the mobile telephone subscribers from three million in 2009 to 12,6 million as at September 30, 2016 has created a growing market for mobile financial services.

Service popularity has been fueled by high mobile penetration rate, the ubiquity of mobile money agents, limited sign up requirements and the significant distrust with traditional banks.

Also, the growing number of mobile agents from about 1 000 in 2010 to 33 000 bears testimony to the ubiquity of mobile money, which provided enhanced outreach beyond traditional banking networks.

Most customers search for convenience and ease of transactions.

This is why mobile banking products such as EcoCash (Econet), OneWallet (NetOne), TeleCash (Telecel), Textacash (CABS), Mobile Banking (CBZ), GetCash Wallet (GetCash), and Mobile Moola (FBC) are gaining popularity.

These products have arguably taken the lustre from Visa and MasterCard.

More importantly, as revealed by the Finscope survey, the said mobile products have gained increasing popularity among low-income workers who prefer their salaries to be paid through mobile payment platforms.

This has also seen more corporates subscribing to mobile money.

Persistence Gwanyanya is an economist, banker. founder and CEO of perconAdvisory, head of financial advisory portifolio of Zimbabwe Business Arts and Hub, and executive member of the Zimbabwe Economic Society., WhatsApp: +263773030691 and blog

Tips to save in a bad or good economy

Savings is defined as a portion of disposable income not spent but accumulated aside for a specific purpose. Most people think savings is for those who earn more, or savings only comes from that excess money you are left with after all your spending. Some again excuse themselves from saving giving various economic reasons.  Today l have 5 tips to help you on how to save in a bad or good economy.

Set financial targets.

first, identify and note down what you want to achieve do not just save for the sake of savings because you may end up using those savings on things that are not important.

Choose a secure mode of saving

Do your research and let it be your decision to select the best mode of savings, either through bank, e-wallets, investments etc. The important thing is placing your money where it gains value or increase, be careful of savings modes that deplete your saving because of high charges.

Financial Discipline 

Be careful of impulse buying each time your pocket receives money.You can’t have enough of money that’s why you see even the richest man on earth is amongst those having sleepless nights on how to generate more income, try to knock at his door and ask for $1 only and see if he will give it to you for free. Control your spending habit and always stick to your budget. Don’t spend money on things you can do without.

Don’t spend all your income increment 

today if you ask someone who earns USD 5 000, What was your first income? most will tell you somethings less than USD 500 and from the numbers, you can tell there is a huge increase, Does this mean this person today is stress-free and has a lot of savings? No. mistake many people do is they spend more than they earn if they get a pay rise they will again improve their lifestyle accordingly. There is no problem in one improving the standard of living but the problem is when you use all your money to improve your lifestyle without saving at least 60% of your income increase.

Stop complaining and giving reasons not to save 

Blaming and complaining will never increase your savings account. No matter how much you earn you can save something from it. The reality is if you give 1000 valid reasons not to save you will never earn a $1 from it, but if you give yourself 1000 reason to save under any condition you will at least earn something.

Start thinking about how to save, there is no minimum or maximum amount to save.

Thank you for reading, the writing is based on my personal opinions, therefore, comments and others views are welcome.

follow Instagram