‘Fi­nan­cial in­clu­sion strat­egy needs in­for­mal sec­tor’

The Herald (Zimbabwe) - - Business - Tawanda Musarurwa

ZIM­BABWE’s fi­nan­cial in­clu­sion strat­egy can be best im­ple­mented if it is in sync with an in­for­mal sec­tor strat­egy, ac­cord­ing to Univer­sity of Zim­babwe (UZ) eco­nomics Pro­fes­sor Ashok Chakravarti.

The mon­e­tary au­thor­i­ties are tar­get­ing to in­crease ac­cess to bank­ing ser­vices from an es­ti­mated 30 per­cent last year to 90 per­cent of the pop­u­la­tion by 2020.

Reserve Bank of Zim­babwe (RBZ) last year launched the Na­tional Fi­nan­cial In­clu­sion Strat­egy tar­get­ing mainly the ru­ral pop­u­la­tion, small­holder farm­ers, mi­cro and small-to-medium en­ter­prises, women and youth. These groups ac­count for the bulk of the eco­nom­i­cally ac­tive pop­u­la­tion.

How­ever, in an in­ter­view with The Herald Busi­ness, Prof Chakravarti said the Na­tional Fi­nan­cial In­clu­sion Strat­egy (2016 – 2020) is rather “nar­row”.

He said the Na­tional Fi­nan­cial In­clu­sion Strat­egy needs to be linked with an in­for­mal sec­tor strat­egy or pol­icy.

“Fi­nan­cial in­clu­sion can­not be seen in a nar­row bank­ing way; it’s part of a broader prob­lem re­lat­ing to the in­for­mal sec­tor as how you can bring the whole in­for­mal sec­tor into the for­mal econ­omy. It’s a broader is­sue.

“That’s why I say the cen­tral bank should not just look at fi­nan­cial in­clu­sion in terms of bank­ing or not bank­ing. So you have got to have a fi­nan­cial in­clu­sion strat­egy that in­cludes an in­for­mal sec­tor strat­egy. The ques­tion I’m rais­ing is that say you want an SME to open a bank ac­count, nor­mally the in­di­vid­ual is re­quired to be reg­is­tered with the tax au­thor­i­ties, but he/she may not want to reg­is­ter with the tax au­thor­i­ties. So the fact that I am ex­cluded has noth­ing to do with the bank­ing sys­tem, but to do with the en­tire reg­u­la­tory en­vi­ron­ment,” said the UZ eco­nomic pro­fes­sor.

The Na­tional Fi­nan­cial In­clu­sion Strat­egy, on the whole aims to in­crease ac­cess to bank­ing, mi­cro-fi­nance, in­sur­ance and cap­i­tal mar­kets and is an­chored on fi­nan­cial in­no­va­tion, fi­nan­cial lit­er­acy, con­sumer pro­tec­tion and mi­cro­fi­nance.

Macroe­co­nomic and Fi­nan­cial Man­age­ment In­sti­tute of East­ern and South­ern Africa (MEFMI) ex­ec­u­tive di­rec­tor Dr Caleb Fun­danga, said in or­der for fi­nan­cial in­clu­sion to be en­trenched within the SMEs sec­tor, tra­di­tional banks need to lever­age on mo­bile money.

“With mo­bile money, things have changed to­tally. Most com­mer­cial banks are clos­ing branches be­cause it’s too ex­pen­sive to run brick-and-mor­tar. Banks should in­creas­ingly em­brace dig­i­tal plat­forms them­selves,” he said.

And Prof Chakravarti agrees: “Mo­bile bank­ing has much eas­ier ac­cess and that’s why peo­ple are much hap­pier to get into mo­bile trans­ac­tion than ac­tu­ally open­ing a phys­i­cal bank ac­count. So we need to think about how bet­ter dig­i­tal plat­forms can be used to in­crease fi­nan­cial in­clu­sion,” he said.

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