Mobile banking takes Zimbabwe by storm

 

Zimbabwe has joined the wagon in embracing mobile banking, as technological explosion and subsequent ballooning of mobile density has seen the mobile phone-based service outpacing the rigid and restrictive traditional banking system while embracing multitudes of grassroots people formally regarded as un-bankable. 

With its generous registration requirements, generally a handset and a registered SIM card, the user-friendly cellphone-based facility has become a hit across all social classes, a move economic analysts say would help ease the life of ordinary people through improved economic activity.

It is a new era of mobile money transfer, mobile payments, and mobile banking, all through one’s mobile wallet ‑ a man’s phone! The African Development Bank (ADB) observes that lack of access to banking services is curtailing the vast population of Africa from active economic participation.

ADB goes on to note that only 20 percent of African families hold bank accounts, while Sub-Saharan Africa has the lowest deposit institution penetration in the world ‑ averaging at 16.6 percent compared with 63.5 percent in developing countries.

Due to the economic stagnation that hit Zimbabwe in the last years, which saw many companies either closing shop or scaling down operations, most people resorted to the informal sector ‑ leading to the mushrooming of small and medium enterprises.

According to the Reserve Bank of Zimbabwe, the informal sector mostly comprising ordinary people now contributes 60-70 percent of Zimbabwe’s Gross Domestic Product (GDP), but regrettably, only 18 percent has access to financial services.

But with Zimbabwe’s three major mobile service providers, Telecel, Netone and Econet Wireless offering varying mobile banking services, the landscape is set to change.

“Mobile banking is the way to go not only in transforming business operations but also in reaching out to the grassroots people and ensure their active participation in the economic matrix.“Banks should be innovative and discard the old notion of a client who walks in with a briefcase in hand to make a transaction, but go to the village where the money is,” said RBZ Deputy governor, Dr Kupukile Mlambo. 

The deputy governor added that instead of resisting mobile banking, banks ought to partner with mobile operators in providing mobile banking services. But of all the mobile banking services, it is Econet Wireless’ Ecocash platform that has redefined mobile baking and business and is to set to reach out to Zimbabweans beyond the borders, starting with South Africa where it has just been introduced. 

Launched two years ago, Ecocash now has agency network of 7 000 from individuals and institutions as of August 1 last year, and is reported to have handled nearly US$200 million in monthly transactions, which can be annualised to 22 percent of Zimbabwe’s GDP.

Customers have the convenience of receiving and sending money, transferring money from bank account to pay bills and accessing a wide range of services at given rates, which can, however, can be cheaper or higher than those charged by banks depending on sums involved. Besides opening up hundreds of jobs, the Ecocash, which is facilitated through Steward Bank, wholly owned by Econet Wireless, the service has made life easier for farmers, transporters and other small-scale entrepreneurs and individuals.

Meanwhile, leading the pack in mobile banking is Kenya with the M-Pesa ‑ provided by Safaricom ‑ which had 14 million accounts by 2011. Tanzania, South Africa and Nigeria also offer mobile banking services.

A UNDP report titled ‘Realizing Africa’s Wealth: Building Inclusive Business for Shared Prosperity’, noted that while African economies are growing at an encouraging pace, its citizens remain stuck in poverty largely because of financial exclusion of ordinary people.

A survey conducted by a local non-governmental organisation, Knowledge Africa, this year revealed that at least US$6 million, which was never banked, circulated at Zimbabwe’s premier agriculture produce market, Mbare Musika.

It also noted that most of the farmers, however, have embraced mobile banking, with the RBZ deputy governor saying mobile banking can be the answer to accessing money outside formal circulation. Mobile banking is also the answer to the problems of physical-geographical isolation, poor infrastructure and financial illiteracy among other challenges that make the traditional banking system not easily accessible or expensive. After all, according to the World Bank, there are about 650 million mobile phones in Africa south of the Sahara, more than the number of users in the United States and the European Union.

October 2013
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