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MAP Zimbabwe Stakeholder Workshop: Key Findings
Harare, Zimbabwe14 December, 2015
Presentation on the findings from the Making Access Possible (MAP) Diagnostic conducted in Zimbabwe
Agenda
• MAP diagnostic components
• Key findings
• Options to extend financial inclusion
Agenda
• MAP diagnostic components
• Key findings
• Options to extend financial inclusion
MAP analyses demand, supply and regulation – formal and informal
Demand Supply Regulation
• FinScope 2011 and 2014
• FinScope MSME 2013 • Consumer interviews
• Interviews• Annual reports• Product data• Mystery shopping
• Interviews• Regulatory and policy
review
Uncover discrete target markets and
needs cases
Product and provider landscape (informal and
formal)
Public policy objectives and regulatory context
Financial inclusion imperatives
Agenda
• MAP diagnostic components
• Key findings
• Options to extend financial inclusion
Domestic Population: ~7 million adults in Zimbabwe
Diaspora Population: 3.3 million Zimbabwean adults outside of Zimbabwe
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 1: Declining income &
employment depress use of formal financial services
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 1: Declining income &
employment depress use of formal financial services
Finding 2: Dutch disease undermines credit but
drives payments – weak exports, strong imports
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 1: Declining income &
employment depress use of formal financial services
Finding 2: Dutch disease undermines credit but
drives payments – weak exports, strong imports
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 3: Banks’ contribution
to financial inclusion has declined – business model changes required for banks to regain ground
Finding 4: Payments & Mobile Money
platforms now dominate financial inclusion landscape
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 5: Cross-border retail money
flows major growth area – fundamental for economy and households to survive
MAP Zimbabwe: 7 Key findings to advance financial inclusion
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Family and friends
Finding 6: Informal financial
services soaring – communities act collectively to survive
Use formal financial services from:
Use informal financial services from:
MAP Zimbabwe: 7 Key findings to advance financial inclusion
Finding 7: Private human capital development a
priority – financial services to support education
Finding 1: Declining income &
employment depress use of formal financial services
Key Findings 1: Declining income & employment depress use of formal financial services
7.0%
1.1%
10.4%
6.0%
11.4%11.9%
10.6%
4.5%
3.2% 3.3%
-3.1%
-8.9%
-5.7%
-3.5% -3.7%
1990 1993 1996 2000 2002 2005 2008 2009 2010 2011 2012 2013 2014 2015
Key Finding 1: Positive growth since 2010, but …
Source: World Bank, 2015; Zimstats 2014
23% 28%22%
56%
198%585%
35141038%
-0.5%
3.1%
3.5%3.7%
1.6%
-0.2%
Inflation
GDP Growth Rate
-17.7%
Key Finding 1: Declining incomes at low end and …
7%
63%
12% 7%
4%
4% 2% 1%
0% 0% 0%
17%
50%
13%
8%5%
2% 3% 1%
1%0%
10%
20%
30%
40%
50%
60%
70%
No income US$1 -US$100
US$101 -US$200
US$201 -US$300
US$301 -US$400
US$401 -US$500
US$501 -US$1000
US$1001 -US$2000
US$2001 -US$3000
US$3001 -US$4000
US$4001and above
2014 2011
$143
*adults are 18 years old and above
70% rural
57% female
59% w/ secondary education or higher
~ 7 million adults
Demographic informationAverage income
decreased from
$143 in 2011 to
$134 in 2014
Source: FinScope, 2011; FinScope, 2014
% of adults
$134
Key finding 1: Generating target markets with stark differences
Source: FinScope, 2014
Target market profiles
$108
$368
$199
$110
$77
Ave
rage
inco
me
(p
.m.)
$69
864 k
575 k
736 k
1.0 m
2.5 m
893 k
• Biggest target market (Migrants) outside of the country (3.3 million adults)
• Salaried workers most educated (34% tertiary education), but one of the smallest target markets and declining (~736 000)
• MSMEs largely informal (~75% informal)
• Farmers largest domestic market (2.5 million), but very low monthly incomes (US$ 77)
• Survivalist workers report lowest average monthly income (US$ 69)
• Remittance receivers (70%) and Dependents (84%) most skewed towards females
3.3 m
40%
65%
84%
70%
50%51%57%
60%
35%
16%
30%
50%49%43%
Salaried workersMSMEDependentsRemittancereceivers
FarmersSurvivalistworkers
Total popl.
Female Male
Key finding 1: Target markets: Gender distribution
Source: FinScope, 2014
864 k575 k 736 k1.0 mil2.5 mil893 k
Key Finding 1: With most people dependent on farming to live
15% 15% 19% 32% 38%
100 %
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
SalariedWorkers
Dependents MSME's Remittancereceivers
SurvivalistWorkers
Farmers
% of adults that report farming as a source of income
736 000864 000
2 500 000
893 000
575 000
1 036 000
51% of adults reporting farming as a secondary or primary source of income
Type of farming activity
Commercial farming
Subsistence farming
No. of adults in
target market
0.04%
99.96%
Key Finding 1: And microenterprises the other survival strategy
EducationA
spir
atio
n
Reluctant entrepreneurSurvivalist
Struggling go-getters
24% 24%
21%31%
$ 248
Source: FinScope, 2012
Driven achievers
22% of MSMEs in farming
60% female
76% informal
$ 463
$ 186
$ 356
Demographics
Key Finding 1: And microenterprises the other survival strategy
$297
$635
$1 141
72%
25%
3%
$0
$200
$400
$600
$800
$1 000
$1 200
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Individual (0 employees) Micro enterprises (1 -5employees)
SME (> 6 employees)
Average income % of MSME population
% of MSMEs
Average month income (US$)
Source: FinScope Zimbabwe MSME Survey, 2012
Key Finding 1: Resulting in fewer formal services used
Legend:• Banked: Adults with bank
accounts
• Formal: Access provided by non-bank formal FSPs, i.e. mobile money, insurers & MFIs
• Informal: Usage of informal providers, e.g. savings groups and moneylenders
• Family and friends: Services provided by family and friends, or self
• Excluded: No current access to formal or informal financial services
2014
8% 73% 4% 14% 1%
0% 20% 40% 60% 80% 100%
% of adults
Reverse Access Strand
2014
30% 39% 7% 16% 8%
Access Strand
Key Finding 1: Fewer employed = Fewer formal services used
736,000 adults (2014)
~ 1.2m adults (1998*)
Source: Southern African Migration Report*, 2008; FinScope, 2014
22%
3%
2%
18%
5%
8%
11%
8%
7%
6%
7%
10%
6%
6%
7%
16%
21%
24%
27%
29%
26%
38%
66%
56%
53%
56%
59%
0% 20% 40% 60% 80% 100%
Salaried workers
Farmers
MSME's
Dependents
Remittance Receivers
Survivalist Workers
Credit Strand
Bank Other formal Informal Family & Friends Excluded
Salaried workers
Finding 1: Declining income &
employment depress use of formal financial services
Finding 2: Dutch disease undermines credit but
drives payments – weak exports, strong imports
Key Finding 2: Dutch disease undermines credit but drives payments – weak exports, strong imports
Dutch Disease: “the deindustrialization of a nation’s economy that occurs when the discovery of a natural resource raises the value of the nation’s currency, making manufactured goods less competitive with other nations, increasing imports and decreasing exports”.
Sources: Handbook of Development Economics (2009)
Key Finding 2: Dutch disease undermines credit but drives payments
0
2
4
6
8
10
12
14
Mar
-09
Au
g-0
9
Jan
-10
Jun
-10
No
v-1
0
Ap
r-1
1
Sep
-11
Feb
-12
Jul-
12
De
c-1
2
May
-13
Oct
-13
Mar
-14
Au
g-1
4
Jan
-15
Jun
-15
USD
25 000
30 000
35 000
40 000USD/ MZM
USD/ ZAR
USD/ BWP
Source: World Bank, 2015; Oanda, 2015
-10
-8
-6
-4
-2
0
2
4
6
8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Exports/ Bn Imports/ Bn Trade Balance/ Bn
USD Foreign Currency Exchange Rates (select SADC trade partners)Trade Statistics 2000 - 2014
Key Finding 2: Dutch disease undermines credit but drives payments
43%
55%
58%63% 63%
57%
45%
42%37% 37%
4%
7%
13%
16% 16%
6%
5%4% 4%
3%
2%3%
3% 3%4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
200
400
600
800
1 000
1 200
2010 2011 2012 2013 2014
Funded income Non-funded income Zimbabwe NPL South Africa NPL Mozambique NPL
Non-performing loans (% of total loans)
Income(US$ 000 000)
Source: RBZ, 2014
Key Finding 2: Dutch disease undermines credit but drives payments
12%
16%
19%
30%
38%
57%
78%
88%
84%
82%
70%
62%
43%
22%
0% 20% 40% 60% 80% 100%
Tanzania 2013*
Mozambique 2014
Malawi 2014
Zambia 2015
Lesotho 2011*
Zimbabwe 2014
South Africa 2014
Access to transactions Excluded
6%
19%
23%
23%
34%
39%
40%
45%
57%
58%
94%
81%
77%
77%
66%
61%
60%
55%
43%
42%
0% 20% 40% 60% 80% 100%
Mauritius 2014
Malawi 2014
South Africa 2014
Mozambique 2014
DRC 2014
Zambia 2015
Botswana 2014
Swaziland 2014
Lesotho 2011*
Zimbabwe 2014
Access to remittances Excluded
Source: FinScope Consumer Surveys
Zimbabwe ranks 2nd in
transactions
Transactions26% (2011)57% (2014)
Zimbabwe ranks 1st in remittances
Adults remittances
Remittances40% (2011)
58% (2014)
Finding 1: Declining income &
employment depress use of formal financial services
Finding 2: Dutch disease undermines credit but
drives payments – weak exports, strong imports
Finding 3: Banks’ contribution
to financial inclusion has declined – business model changes required for banks to regain ground
Key Finding 3: Banks’ contribution to financial inclusion has declined – business model changes required for banks to regain ground
Key Finding 3: Banks’ share of financial inclusion declines
Legend:• Banked: Adults with bank
accounts
• Formal: Access provided by non-bank formal FSPs, i.e. mobile money, insurers & MFIs
• Informal: Usage of informal providers, e.g. savings groups and moneylenders
• Family and friends: Services provided by family and friends, or self
• Excluded: No current access to formal or informal financial services
30% 39% 7% 16% 8%
Access strand
24% 14% 22% 24% 16%
0% 20% 40% 60% 80% 100%
Access strand
Source: FinScope Consumer Survey 2011; 2014
2011
2014
4%
25%
3%
23%
70%
64%
65%
61%
25%
9%
32%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2014 2011 2014
Dormant (0 trans.) Mailbox (1-2 trans.) Used (3+ trans.)
Key Finding 3: Banks’ share of financial inclusion declines
Source: Findex, 2011; Findex, 2014
Deposits Withdrawals
% of banked adults by frequency usage
% of bank
accounts
Key Finding 3: Banks’ share of financial inclusion declines
Source: FinScope Consumer Survey 2011; 2014
24% 26%
41%
67%
16%
30%
66%
25%
73%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Banked Other formal Informal Family and Friends /At home
Excluded
Pe
rce
nta
ge o
f ad
ult
s
2011 2014
Key Finding 3: Banks’ share of financial inclusion declines
2111
602 526.6
260
38.4
$132
$177
$418
$369
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
0
500
1000
1500
2000
2500
Family and Friends Informal credit Mobile credit Bank MicrofinanceInstitutions
Profile of borrowers by institution
Total Borrowers Average Income
Source: FinScope Consumer Survey 2014
Total number of borrowers
(‘000)
Average income(USD)
Key Finding 3: …and less trusted than MMOsPreferred provider for most adults in Zimbabwe
2%
5%
6%
9%
26%
30%
10%
27%
27%
32%
37%
42%
16%
25%
22%
21%
17%
12%
20%
19%
11%
9%
11%
3%
52%
25%
34%
30%
8%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
MFIs
Cooperatives
Insurance companies
Retirement funds
Banks
MMOs
Most trusted Trusted Slightly trusted Not trusted Dont Know
Key Finding 3: Consumer perceptions of pricing models put banks on the back foot
“We do not need banks anymore because we now have EcoCash”
-Survivalist worker: Farm labourer at a pig farm
“The bank eats into your money”
-Government worker
Finding 4: Payments & Mobile Money
platforms now dominate financial inclusion landscape
Key Finding 4: Payments & Mobile Money platforms now dominate financial inclusion landscape
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
RCTVInvestmentin Business
EducationAssetaccumulation
RDTVFarminginputs
EncashmentConsumptionsmoothing
Riskmitigation
Bill paymentLocalpayment
% o
f a
du
lt p
op
ula
tio
n
Save Credit Payment Insurance Overlap
Key Finding 4: Payments dominate financial services needs
Source: FinScope Consumer Survey, 2014
RCTV – Remote cross-border transfer of valueRDTV – Remote domestic transfer of value
What is a need case?
A need case is a discrete consumer need that can be satisfied by one or more formal or informal financial services.
Key Finding 4: How needs are met by providers
Banks Informal Mobile Money
Asset Accumulation
Remote Cross-border transfer of value
Remote domestic transfer of value
Farming inputs
Enterprise Finance
Education
Local Payments
Bill Payments
Risk Mitigation
Consumption Smoothing
Encashment
Intensity of usage
Low usage
Average usage
High usage
Key Finding 4: Mobile Money now dominates payments
-
20
40
60
80
100
120
140
160
180
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2009 2010 2011 2012 2013 2014
Mill
ion
s o
f tr
ansa
ctio
ns
Val
ue
of
tran
sact
ion
s (M
illio
ns
of
USD
)
POS (Value USD) ATMs (Value USD) Mobile (Value USD)
POS (No. of transactions) ATMs (No. of transactions) Mobile (No. of transactions)72%
3m
5.3m
Mobile moneysubscriptions
(2013)
(2014)
+72% growth in mobile money subscriptions
Source: RBZ, 2015
Mobile
POS
ATM
Key Finding 4: Providers of remittances
Source: FinScope Consumer Survey, 2014
20%
2%
5%
6%
8%
64%
81%
67%
79%
68%
5%
6%
13%
10%
7%
11%
11%
15%
5%
16%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Remote cross-border transfer of value
Remote domestic transfer of value
Consumption Smoothing
Education
Asset Accumulation
Banked Formal non-bank Informal Family and friends
Key Finding 4: Shift to agents with mobile leading the way
2239
23 379
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Axis Title
Bank agents MMO agents Mobile Banking Agents ATMs POS
Agents
POS
ATM
Source: RBZ, 2015
No. of instruments
No. of agents
Key Finding 4: But mobile money a key consumer protection concern
• Individual consumers do not receive deposit protection• Legally binding regulations for MMOs still to be passed• No banking recourse for individual consumers • Interoperability not yet mandated
Finding 5: Cross-border retail money
flows major growth area – fundamental for economy and households to survive
Key finding 5: Cross-border retail money flows major growth area
Key Finding 5: Cross-border retail money flows major growth area
70%
13%
6%
7%
2%1% 1%
South Africa
UK
Botswana
Elsewhere in Africa
USA & Canada
Australia and NewZealandElsewhere in theWorld
Source: FinScope 2014, IOM, 2012; Southern African Migration Report, 2008, UNDP, 2010 & World Bank
2014
0
100
200
300
400
500
600
700
800
900
2009 2010 2011 2012 2013 2014
Remittances
USD 770m
USD 300m
931, 000 (13% of adults) received remittances in 2014
3.3 million (47% of adult population) live outside of Zimbabwe
Key Finding 5: Banks selling directly cross-border to diaspora
Credit services
• Savings accounts
• Transaction accounts
• Credit card
Insurance Banking services Investment services
• Equity• Bonds• Property• Retirement
• Home mortgages
26%
11%
32%22%
22%
16%
20%
14%
48%
72%
47%
64%
4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Driven achievers Reluctant entrepreneurs Struggling go-getters Survivalist
Manufacturing Service industry Trade Finance Other
Key Finding 5: Main MSME sector is cross-border trade
Source: FinScope Zimbabwe MSME Survey, 2012
% of MSME population
Key finding 6: Informal financial services soaring
Family and friends
Finding 6: Informal financial
services soaring – communities act collectively to survive
Use formal financial services from:
Use informal financial services from:
Key Finding 6: Providers for savings
16%
13%
15%
18%
14%
13%
13%
15%
21%
20%
22%
24%
50%
54%
50%
44%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Planned risk mitigation
Consumption smoothing
Education
Asset accumulation
% of total use cases met by provider
Banked Formal non-bank Informal Family and friends / at home
Source: FinScope Consumer Survey, 2014
80% of local transactions happen in cash
Key Finding 6: Informal provision dominates
So, if something went wrong who would you think of… as the first contact to get a loan from?
It would be family. I am saying it because I cannot think of any financial institution that I could go to; to get money because you cannot get any financial assistance from any
institution. They are not lending. If they are lending, then they have so many strings attached.
Can you think of something that went wrong?
I would have to rely on family. Even when we had to bury my dad, his children and family contributed money for most of the requirements. Of course we also made use of the burial
society funds.
Private Sector Worker: PETER – Pharmaceutical Wholesaler (High Income)
Key finding 7: Private human capital development a priority
Finding 7: Private human capital development a
priority – financial services to support education
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
RCTVInvestmentin Business
EducationAssetaccumulation
RDTVFarminginputs
EncashmentConsumptionsmoothing
Riskmitigation
Bill paymentLocalpayment
% o
f a
du
lt p
op
ula
tio
n
Save Credit Payment Insurance Overlap
Key Finding 7: Strong drive for accumulation of non-financial assets
Source: FinScope Consumer Survey, 2014
RCTV – Remote cross-border transfer of valueRDTV – Remote domestic transfer of value
Key Finding 7: Private human capital development a priority –makes for resilient microenterprises
0%
10%
20%
30%
40%
50%
60%
Driven achievers Reluctant entrepreneurs Struggling go-getters Survivalist
% o
f M
SME
po
pu
lati
on
Zimbabwe Malawi Mozambique
Source: FinScope Zimbabwe Consumer Survey, 2012, FinScope MalawiConsumer Survey, 2012 & FinScope Mozambique Consumer Survey, 2012
Agenda
• MAP diagnostic components
• Key findings
• Options to extend financial inclusion
Options to extend financial inclusion
1. Focus on where you can drive financial inclusion given current conditions
2. Facilitate transaction based revenue for banks
3. Strengthen underpinnings of the credit market
4. Enhanced interoperability at retail payments level
5. Facilitate cashless payments for cross-border traders
6. Facilitate formal remittances and cross-border services for migrants
7. Facilitate products to build human and physical capital
MAP is a comprehensive market assessment of retail financial services. The purpose of MAP is to assist the Government to identify key priorities and opportunities to extend access to financial services.
The MAP framework has been developed in partnership between Cenfri, FinMark Trust and the UNCDF and is intended to become a public good that can advance the global financial inclusion agenda.
Thank You!
Please contact us at…
Wadzi MachenaE-mail: wadzi@cenfri.org
Hennie BesterE-mail: hennie@cenfri.org
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