Harare — AT least 78 percent of potential depositors in urban Zimbabwe are either keeping their cash outside the commercial banking system or have no disposable incomes to keep with the banks, a second quarter survey by the Zimbabwe All Media Products Survey (ZAMPS) revealed last week.
ZAMPS estimates that 89 percent of the country's urban adult population is also keeping its deposits out of building societies; stressing lack of confidence in the banking industry following the 2004 to 2006 financial crisis, has left the sector in dire need for rejuvenation strategies.
What this means is that only 22 percent of Zimbabwe's urban population operates accounts with commercial banks while a negligible 11 percent still transacts through building societies.
It also confirms why takeovers, mergers and disposals are now on the increase in the financial services industry. Three weeks ago, troubled banking group, NDH Holdings, surrendered its merchant banking license to the Reserve Bank of Zimbabwe after failing to recapitalise it.
NDH had earlier disposed off its stockbroking outfit as the financial crisis, fomented by a deadly cash crunch, rocked the sector.
CFX Financial Services was also recently forced to accept the takeover and eventual integration of its flagship commercial bank, CFX Bank, into Interfin Banking Corporation.
"At 22 percent commercial bank usership and 11 percent building society usership the sector is faced with a huge challenge among the urbanites," ZAMPS said.
"This usership record against the number of financial houses requires a lot of confidence building among the urbanites. Against this background however, CBZ, Barclays and CABS are the leaders in patronage in this category," the report added.All respondents said they had no business, or carried no transactions through discount houses, merchant banks and asset management firms.
In an earlier interview with The Financial Gazette, Bankers Association of Zimbabwe president, John Mushayavanhu, said industry players have been unnerved by the waning confidence levels.
"I am concerned with the low bank deposit base and would like to see an increase in the deposits," he said.
"Total deposits in the banks, at +/-US$1,4 billion can hardly sustain the more than 20 deposit-taking financial institutions. The banking public has over the years lost confidence in the banking sector due to various problems.
"The unbanked population is now at an all time high and I would like to work with my fellow bankers to make banking attractive and worthwhile to the investing public," he said.
The ZAMPS report showed, however that the market had kept confidence in traditional financial institutions.
It estimated that CBZ Bank, through which government-linked transactions are channeled, controlled an estimated 20 percent of the commercial banking deposits, followed by Barclays Bank at 18 percent, ZB Bank, 10 percent, Standard Chartered Bank, 10 percent and the Zimbabwe Allied Banking Group and Stanbic Bank, which were tied at eight percent.
CABS, the country's largest mortgage lender, was estimated to control 55 percent of the building society sector accounts, followed by CBZ Building Society and FBC Building Society. The report estimated that there is an 85 percent non-usage in the insurance industry, another sector battling to overcome the devastating effects of the decade-long domestic economic crisis.
Last week, government cancelled licenses of 18 insurance companies.
The ZAMPS report indicated a high ownership and usership of working cell phones among urban residence, where an estimated 82 percent of respondents said they were on mobile phone networks.
"Among these cell phone users in this quarter (second) Econet had 72 percent usership, Telecel with 29 percent and NetOne seven percent," added the report.
"Working fixed telephone lines at home has 11 percent penetration," ZAMPS said.