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.

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Digital money use on an increasing in Zimbabwe

Zimbabwe economy has been hit by cash crisis, it’s now difficult to transact as the USD has become a diamond. The shortage has resulted in many adopting digital money that is the use of mobile payment platforms like eco cash, telecash, internet banking.

I am sure and positive if we all create an ecosystem as a country one day we will stop hunting for notes and coins, however, this can not happen if a landlord is refusing to receive rent payment electronically via eco cash or rtgs. It’s not something new other countries like Kenya are doing it well.

For your views and comments, you are free to share with me Tavonga in financelounge102.

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Mobile Money Solution to Cash Crisis

Have you ever spend a night at an ATM waiting to withdraw $100 for you to buy groceries in a supermarket? If yes l am sure you understand how painful it to stand and wait for the note to come in your hands under accompany of mosquitoes.
The same way you will entertain yourself playing Candy Crush game in that long queue in a bank it’s the same way you can just walk away and press few buttons on your phone to buy the same grocery.

If you agree digital money is the solution to cash crisis lets spread the word to everyone that way we will create an acceptable complete digital money ecosystem.

For more information or comments few free to join me in the finance lounge 102

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Work for it

We breathe the same air, share the same sky, share the same blood. But why is it what’s in our hands it’s different? here are  3 reasons why

Sleeping Habits:

we share same hours of the night but we sleep different hours, successful people manage their sleeping habits, the more hours you sleep the more you miss opportunities and unproductive you become. Always sleep wise don’t be like those who sleep 9 hours at night and will sleep additional 3 hours during day because it’s hot or because they ate a big pup, mathematically they will spend half of their 24hours asleep and of the remaining 12hours half of it will be wiped with time they take walking, bathing, driving, in taxi, cooking,  chatting, social networking so at end of day you may find out that per day they will have less than 6 hours productive time. hence by the end of 24hrs, we will be having different results in our hands

Decision Making:

Our minds are also small boardrooms for our life. You set your own agenda daily and find a way to attend to it. Most people are afraid to make decisions because they fear to fail or the unseen future, they have brilliant ideas but they can’t share them because they think they are not worth it. Be a person who is self-reliant just imagine if you are left alone on earth, will you kill yourself because there’s no one to help you?

Start making decisions that change your life, not all decisions will be right but be ready to do something about the wrong decisions because at the end of the day your decisions will determine what’s left in your hand.

Work for it: 

it’s very simple and straight forward, you can’t have something in your hands you didn’t work for. the more you work the more reward you get. the more risk you take the more reward you get

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you can do it

have you ever asked yourself if you

  •  can do something or not?
  •  qualify or not?
  •  fit or not?
  •  are the right candidate or not?
  • can stop something

Common answer you get from many is, l can’t or l am not sure.In life, if you want to achieve anything you first have to believe in yourself and believe you can do it

Always remember no one can do it the way you do.