AN estimated 70 percent of the country’s population prefers keeping its money under “pillows and mattresses” despite the increase in financial inclusion mainly driven by mobile money platform, the FinScope Consumer Survey has shown.While the survey, which was launched in Harare yesterday, indicates the banked population increased from 24 percent (1.45 million) in 2011 to 30 percent (2.08 million) in 2014, most Zimbabweans operate outside the banking system.
The survey says 74 percent of the unbanked population indicated they do not need a bank account while some said they could not afford an account.
Low incomes resulting in the inability to maintain minimum balances required by banking institutions are said to be major reasons for low savings and the high rate of financial exclusion in the economy.
Bulawayo based economic analyst and National University of Science and Technology (Nust) lecturer Ian Ndlovu concurred with the survey saying traditional banking was losing confidence grip because of the element of inconvenience and negative interest rates on deposits when compared to mobile money services.
“The unbanked population is a symptom of economic fundamentals that are not right. In an economy dominated by the informal sector, collapse of some banks and negative interest rates, depositors are concerned about the security and stability of banks,” he said.
However, the survey says financial inclusion rose to 77 percent in 2014 from 60 percent in 2011 due to adoption of mobile money platforms.
Of those who are registered users, 80 percent use it to remit while 46 percent use it to transact in order to pay utility bills, buy airtime.
The survey indicates 53 percent of adult Zimbabweans do not save with 69 percent of adults claiming they do not have sufficient money after living expenses while 19 percent have no income to save.
Out of 47 percent adults who save, 35 percent save to cover living expenses while 21 percent do so for education and school fees.
Only 19 percent save for non-medical emergencies.
A majority of the banked respondents regarded safety as the main reason for banking while 39 percent used bank accounts as a means to either deposit or receive money from an employer. Furthermore, 20 percent of those banked believed it was an easy way to obtain loans.
Banks have emerged as the main drivers of transactional and credit products although banking costs remain a barrier to banking.
The survey showed that banking infrastructure is inaccessible to rural areas where 70 percent of the population live.
This is despite rural citizens becoming major economic players in the mining, farming and tourism sectors, which are increasingly improving revenue earnings.
The study showed that 58 percent of adults do not borrow with 39 percent of the group fearing debt while 35 percent are concerned about defaulting on credit.
On one hand 42 percent of adults borrow mainly from family and friends, 40 percent of borrowers do so for developmental reasons, 21 percent to cover living expenses, while 10 percent borrow to pay off another debt.
The survey also showed that 70 percent of adults do not have insurance with most of those (68 percent) claiming that insurance is not affordable and too expensive.
Of those who do not have insurance, 30 percent believe they do not need it while 10 percent do not know how insurance works.
Only 30 percent of the population has insurance, the main driver being funeral cover/insurance (77 percent) and medical aid (30 percent).
Burial society membership (76 percent) seems to be a popular form of informal insurance.
The study revealed a major shift in the means of remitting, with people who formerly used informal mechanisms of remitting (e.g. family and friends, bus or taxi drivers) now using mobile money remittance services.
A majority of adults who claimed to remit used other formal channels such as the bank, mobile money and cross-border channels like Mukuru, MoneyGram and Western Union among others.
The study also shows 65 percent of the adult population earns $100 or less per month.
Responding to the survey, Bankers Association of Zimbabwe president, Sam Malaba urged the government to device macro-economic strategies to boost livelihoods of Zimbabweans as economic hardships continue to worsen.
Charity Dhliwayo, the deputy Reserve Bank Governor said the findings of the survey were “of keen interest to the RBZ in that they stimulate an important dialogue” and “lay the basis for evidence based interventions”.
She asserted the results would enable policy makers to effectively deal with issues hindering financial inclusion while innovative service providers will be encouraged to deliver appropriate services to financial excluded segments. — Harare Bureau/Business Reporter.