Financial exclusion damages economy

Although bank deposits have been on the up since the economy was dollarized, the rate of growthcould have been much higher if more people had been financially included. The Finscope consumer survey has indicated that 40 percent of the adult population is financially excluded, with a further 22 percent using informal financial products to survive. Only 24 percent of the adult population banks in Zimbabwe.

We have 65 percent of the population living in the rural areas, with many of them keeping their money under their pillows. Those who have their salaries paid into a bank account withdraw them immediately and the high bank fees put off savers. Even the Consumer Council of Zimbabwe believes that the prevailing bank charges are “exorbitant and unsustainable.”

In the 2011 monetary policy review, the monetary authorities pointed out that bank charges were very high and discouraged the use of formal banking. The table below shows the range in the levels of bank charges being levied by commercial banks, as of 30 June 2011. Bankers Association of Zimbabwe has tried to justify the high bank service charges saying, Zimbabwean banks offer similar rates to other banks in the region.

The issue of confidence has also discouraged potential savers. During the Zimdollar era many savers had their bank accounts closed down and they were not refunded their money.

Banks should come up with innovative packages for the rural population to encourage them to put their money into ban accounts. Banks should therefore increase their visibility in the countryside to showcase their financial concepts in a simplified manner.

Post published in: Business

Leave a Reply

Your email address will not be published. Required fields are marked *