ZIMBABWE – A United Nations survey on Zimbabwe’s banking sector has warned local banks of being elbowed out by mobile money operators if they don’t adapt to the country’s changing economic landscape.
With job losses on the rise and more companies closing, the economy is becoming more informal, with more than 80% of financial transactions shifting to cash, as “mobile money” transactions have grown by over 100 % in the last two years.
The banking system is in real trouble, it has lost a lot of ground
The UN report, “Making Access Possible (MAP) Diagnostic”, which was released on Monday estimates 25% of bank accounts are dormant, as the informal market begins to dominate.
South African think tanks — FinMark Trust, Centre for Financial Regulation and Inclusion (Cenfri) and the United Nations Capital Development Fund (UNCDF) – conducted the survey.
“The banking system is in real trouble, it has lost a lot of ground. Financial inclusion in Zimbabwe is not about credit or savings it is about payments and the banks have been tied down by the ankle when it comes to payments,” Cenfi technical director, Hennri Bester said.
Finance minister, Patrick Chinamasa said the findings of the survey will help stakeholders ensure the rural population will benefit from formal banking sector services.
“What we need now is a strong and vibrant sector that can respond to the needs of companies. The rural folk is unbanked and we are really worried over such a trend,” he said.
Mobile money transfer facilities are popular with the rural population, who have no access to banks, but are near shopping centres, where some retailers offer the facilities.
Zimbabweans said they trusted mobile money transactions more than banks, as they had not lost money through that system, compared to the banking sector, where several financial institutions have collapsed in recent years.