20 June 2018

Zimbabwe: SMEs Still Largely Unbanked

Emerging small to medium enterprises (SMEs) are still lagging behind in financial inclusion accounting for only 1 percent of the total bank accounts as at the quarter to March 2018.

Figures from the Reserve Bank of Zimbabwe (RBZ) show that as of March 31, 2018, total bank accounts totalled 5,5 million, but a paltry 57 512 SMEs have bank accounts out of a population of 14 million Zimbabweans.

Likewise, the sector accounted for only 3 percent of the total value of loans disbursed, as the financial inclusion gap remains wide, despite efforts being made to ensure Zimbabweans have access to financial products.

In the context of Zimbabwe, financial inclusion is defined as the effective use of a wide range of quality, affordable and accessible financial services, provided in a fair and transparent manner through formal or regulated entities, by all Zimbabweans.

RBZ deputy governor Dr Jesimen Chipika said the central bank was cognizant of the gap in financial inclusion by marginalised groups such as MSMEs, the disabled, youth, rural population and women.

Lending to these groups has been viewed generally as high risk due to a number of reasons including informalisation, lack of acceptable collateral, distances from financial institutions, low levels of awareness of the facilities and low financial literacy.

As such, more efforts must be put in place to ensure they also have access to formal financial products.

"The Bank continues to spearhead implementation initiatives targeted at minimising constraints and challenges to the inclusion of disadvantaged groups as well as promoting of access to and increased usage of financial services by all economic agents including women," said Dr Chipika by email.

Statistics also show that women own over half of the SME businesses, a trend not unique to Zimbabwe alone but widespread across the Sub-Sahara Africa.

"The Reserve Bank of Zimbabwe has established a number of empowerment facilities and other financial inclusion strategies to benefit various priority groups that are financially excluded including women as part of the implementation of the National Financial Inclusion Strategy," she said.

The Financial Inclusion Strategy identifies priority segments which have been marginalised by their circumstances.

For MSMEs, the level of financial inclusion remains low, according to a Finscope MSMEs Survey Zimbabwe 2012.

The same survey showed only 14 percent of MSME owners were banked. The proliferation of mobile money and plastic money in the past two years has however changed the landscape with more people having access to regulated and formal financial services.

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