A couple of days ago FinMark Trust, a South African based independent trust that conducts regional assessments on financial inclusion, insurance and market access released the latest FinScope Survey for Zimbabwe.
This is a follow-up to a similar survey from 2011. The latest edition presented several insights into the state of financial inclusion in Zimbabwe based on an assessment of a national sample of adults from both urban and rural settings.
Unsurprisingly, the key highlights of the FinScope Survey largely point to the impact of mobile money on the financial services landscape in Zimbabwe. While a host of facts and figures show how mobile money has disrupted the delivery of financial services, the other side of the coin shows the vast opportunities that lie in mobile money services.
Financial inclusion has increased from 60% in 2011 to 77% in 2014. This has been attributed to the various mobile money services that were spawned during this 3-year period from all three mobile operators and network independent providers like Nettcash.
In 2014, 3.15 million Zimbabweans, which make up 45% of the country’s adult population, were registered for mobile money. For mobile money service providers, this represents a huge potential market for mobile money services. The untapped 55% of the market could effectively help boost waning telecoms revenues that now require strong contributions from overlay services that mobile money can help introduce.
80% of mobile money subscribers use it to remit money. This is supported by citations from the majority of the unbanked population that receives payments such as salaries in the form of cash. This money is then moved around via mobile money channels.
Only 46% of mobile money subscribers use it for transactions like paying bills and purchases. The figure points to a huge opportunity for mobile money powered commerce that hasn’t been addressed by the limited services that people can pay for.
Another reason is also the high cost of transactions. If 65% of respondents in the survey were registered as earning $100 or less per month, there is little reason to move those funds that have been received in the form of cash onto electronic platforms to conduct transactions that have steep penalties.
2.08 million individuals (30% of the adult population) have a traditional bank account, a figure that has increased by 6 percentage points since 2011. Of the 70% of the market that is unbanked 74% dismissed a bank account as something that is unnecessary or simply as something that they could not afford.
When mobile banking came onto the scene it appealed to this part of the market because of less barriers in presenting the virtual mobile account as an added service to the mobile phone, and also because of the absence of minimum balances that are an uncomfortable condition in a tough economy.
53% of Zimbabwean adult population does not have any savings. 69% of this group attributed this to limited financial resources after meeting obligations (there is no money left) and another 19% attributed this to not having an income.
This weighs in on services that rely on saving and investment like insurance. Only 30% of Zimbabweans have insurance. 77% of the uptake in these cases is for funeral or life assurance and 30% is for medical aid. 76% of people with some form of insurance list burial societies as their form of insurance.
The numbers here justify micro-insurance products like Telecare and EcoSure that came onto the market last year. There is a huge potential market that these mobile networks are chasing with these services and in the same vein opportunities for other forms of mobile micro-insurance are evident for 70% that doesn’t have any form of insurance and the 68% of Zimbabweans that think it is too expensive.
58% of adults claim to remit. 83% of this group use formal channels that now include banks, money transfer services and mobile money options like EcoCash and Western Union option or the Telecash-Mukuru channel.Only 9% still use a bank for remittances and informal channels like buses are only being used by 17% of the market.
Can the mobile networks answer every call on their own?
The opportunities that are evident in financial services require solutions that mobile money is more than prepared to help provide because of the reach of the platforms.
However, the numerous calls might be best answered by third-party providers that develop solutions and then seek the mobile networks to provide the platforms for the delivery. This avoids the case where the mobile network spreads itself in every direction simply because it possesses the platform to do so.