This is a summary of a paper written by Nandini Harihareswara, Zerubabel Junior Kwebiiha, Uloma Ogba, Anne Duijnhouwer and Moira Favrichon; published by the UN Capital Development Fund’s Mobile Money for the People (MM4P) program; 2018; 32 pages; available at https://uncdf-cdn.azureedge.net/media-manager/89877
The goal of this paper is to detail the progress and prospects of the National Financial Inclusion Strategy written by the Zambian Ministry of Finance for the years 2017 through 2022. The strategy has four aims: increase the accessibility of multiple delivery channels, create a diverse array of customer-focused products, increase the amount of financing available to small and medium-sized enterprises (SMEs) in the agricultural sector, and improve customer protection and capability. The rate of mobile-phone penetration in the country is 82 percent, and the rate of financial inclusion is 59 percent. The financial inclusion rates of men and women are 69 and 57 percent respectively.
Digital financial services (DFS) have played a major role in the development of the financial sector in sub-Saharan Africa, including Zambia. From 2014 to 2017, the percentage of individuals who have access to DFS in Zambia jumped from 2 percent to 24 percent. The least tapped market segments include women and youth as well as men in rural areas. The country has 18 firms offering mobile money services, and the number of agents – which provide cash-in, cash-out and other services – grew 74 percent from 2014 to 2017, reaching 243 agents per 100,000 inhabitants.
The authors also measured the total value and number of person-to-person transactions executed by banks, mobile network operators (MNOs) and third-party providers. Of these, “banks contributed 44 percent of the total volume of transactions, corresponding to 93 percent of the total value of transactions.” The average transaction size at banks was “ZMW 1,565 (USD 156) compared to ZMW 146 (USD 15) for MNOs and ZMW 17 (USD 2) for third-party providers.” Although third-party providers only transferred 1 percent of the value of all transactions, they executed about a quarter of the number of transactions.
The authors conclude that collaboration between fintechs (financial technology firms) and traditional financial services providers may be the best way to give more Zambians access to formal DFS such as pay-as-you-go services, digital credit and digital insurance. Among the challenges that need to be addressed are low levels of product awareness, problems managing agent networks, a lack of successful rural business models and a lack of trustworthy market data.
By Michelle Fleming, Research Associate
Sources and Additional Resources
UNCDF programming in The Gambia
https://www.microcapital.org/microcapital-brief-uncdf-itc-unveil-18m-jobs-skills-and-finance-for-women-and-youth-in-the-gambia-programme/
National Financial Inclusion Strategy
https://www.tralac.org/documents/resources/by-country/zambia/1168-zambia-national-financial-inclusion-strategy-2017-2022/file.html
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