Zim seeks to reap youth demographic dividends
THE Government, through the National Financial Inclusion Strategy II (NFIS II), has identified the youths as a key demographic group that carries huge potential to drive Zimbabwe’s economic growth and progress towards the attainment of some of the country’s Sustainable Development Goals (SDGs).
In Zimbabwe, young people are the largest and fastest growing segment accounting for 62 percent of the total population of 15,78 million.
The NFIS II, which the Government launched this week and running through 2022 and 2026, follows the successful implementation of the National Financial Inclusion Strategy I (NFIS I), which ran between 2016 and 2021 focusing more on access to financial services by low-income and marginalised groups that include women, youths, rural communities and smallholder farmers.
NFIS II seeks to deepen the usage of financial products in the informal sector to achieve the aspirations of the National Development Strategy I (NDS I) making those in the informal economy more prosperous.
The NFIS II notes that financial inclusion without taking into account the needs of 62 percent of the population is sub-optimal.
This is on account that financial services and products are a crucial enabler of young people’s economic empowerment, well-being and sustainable livelihoods.
“Young people are the largest and fastest growing segment of the population, with the youth in Zimbabwe accounting for 62 percent of the population of 15,78 million in 2022.
“NFIS II recognises that young people, given an opportunity, skills development and capacity building, and sufficient support, can drive economic growth and contribute towards the attainment of some of the SDGS,” it said.
“Youth transitions and lifetime trajectories from adolescence to adulthood call for more innovative approaches to the provision of financial services and products to meet the needs of the young people at the various stages of life and facilitate effective financial inclusion of the young people. A one-sizefits-all approach to youth financial inclusion has the potential to contribute to the financial exclusion of young people.”
During the implementation of NFIS I, a number of initiatives were undertaken to improve the financial inclusion of young people including the establishment of EmpowerBank, which is dedicated to young people as well as the rolling out of financial literacy programmes, and the establishment of the credit reference system. Financial inclusion of the young people was largely driven by the uptake of banking products bolstered by mobile money, a development that was also noted among the seniors.
A consumer survey carried out by consultancy FinScope indicated that the improvement in youth financial inclusion was reflected by the decline in the proportion of youths that are financially excluded, from 26 percent in 2014 to 14 percent as of June this year.
“In terms of uptake of transactional accounts (both bank and mobile), 67 percent are formally served, with only 7 percent of the youth having bank transactional accounts. Further, in terms of credit uptake from banks, only four percent of young people are included, while 61 percent are not borrowing at all.
“In terms of insurance uptake, 81 percent of the young people have no insurance cover.”
Although the percentage of youths formally banked has increased in the past five years, youths continue to be financially excluded as they are generally considered “high risk” due to several reasons including the negative stereotypes — lack of credit history, lack of requisite collateral, lack of financial literacy and lack of adequate business experience and skills.
To facilitate improved uptake and usage of financial services as well as economic empowerment and financial health of the youth, NFIS II provides for strategic activities such as collecting and analysis of sex and age disaggregated data, establishing institutional and coordination mechanisms as well as encompassing financial education in schools
curricular.
In separate interviews, economic analysts hailed the Government’s efforts in improving financial inclusion among the country’s population particularly women, the youth, rural communities, people living with disability, and smallholder farmers saying this dovetails with the country’s national development agenda.
“What’s being projected by the NFIS II is the Government’s desire to leave no one and no place behind in the country’s development agenda. If every citizen, particularly the youth are embraced in financial inclusion, it means Zimbabwe’s future is guaranteed given that the young generation accounts for the bulk of the country’s total population,” said economist Mrs Chipo Warikandwa.
In Zimbabwe, Micro, Small to Medium Enterprises (MSMEs) are recognised as a significant contributor to economic development, wealth and employment creation as well as poverty alleviation contributing around 60 percent of the Gross Domestic Product and employing 1,7 million people, the majority of whom are women.
According to the 2022 FinScope MSMEs Survey, the majority of MSMEs (71 percent) are in rural areas and women own 60 percent of MSMEs in the country.
“So, by having a working NFIS it means such groups as women and youths and those entrepreneurs who form the MSMEs, they are playing a pivotal role in economic development and sustenance of the country. The Government is spot on by having a national financial inclusion strategy that seeks to deepen the usage of financial services and products in an inclusive economy,” said another economist Ms Wendy Mpofu.