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Republic of

Ministry of Finance Investments and Debt Management Department Rural Finance Unit

Report on the Rural Finance Policy and Strategy Dissemination Workshop

9th-11th December, 2019 Radisson Blu Hotel, Lusaka

TABLE OF CONTENTS

1.0 INTRODUCTION ...... 1

2.0 OBJECTIVE ...... 2

3.0 DISCUSSIONS ...... 2

3.1 Financial Sector Policy Landscape in Zambia ...... 2

3.2 Brief Overview of the Rural Finance Policy and Strategy ...... 3

3.2.1 The Role of the Legislature in Rural Finance ...... 4

3.2.2 The Role of Government Line Ministries in Rural Finance ...... 4

3.2.3 The Role of the Private Sector and Strategic Partners in Rural Finance ...... 4

3.3 The Rural Finance Expansion Programme...... 5

4.0 SUMMARY AND RECOMMENDATIONS...... 5

APPENDICES ...... 6

i. Table of Questions Asked ...... 6

ii. Action Plan...... 7

iii. List of Delegates...... 9

i

1.0 INTRODUCTION The Rural Finance Policy and Strategy (RFPS) is a policy document which sets out a framework for the implementation of all rural finance activities in Zambia. The RFPS was finalized in 2012 and approved by Cabinet in 2013. To oversee the implementation of the RFPS, the Rural Finance Unit (RFU) was created in 2018 within the Ministry of Finance under the Investments and Debt Management Department. RFU is mandated to provide policy oversight, develop and coordinate strategies that govern the rural finance sub-sector in Zambia.

In order to execute its mandate effectively, RFU saw it fit to disseminate information about the RFPS to various stakeholders and the general public. This was with the view of creating awareness among the stakeholders who would, in turn, support the implementation of the policy as well as providing a feedback loop necessary for the review and possible amendment of the policy and strategy. It is from this perspective that the Ministry of Finance, through RFU held a three-day sensitization workshop to disseminate the RFPS to selected stakeholders, whom among others included Members of Parliament, Government Ministries, Financial Sector Regulators, Financial Service Providers, and other identified Strategic Partners. The meetings were supported by the Rural Finance Expansion Programme (RUFEP).

The official opening of the workshop was graced by the First Deputy Speaker of the National Assembly, Hon , MP, the Secretary to the Treasury, Mr. Fredson K. Yamba and the Clerk of the National Assembly, Mrs. Cecilia N. Mbewe. In her opening speech, the First Deputy Speaker acknowledged the importance of rural finance in wealth distribution and economic growth, especially that the majority of Zambia’s population is rural-based. She further pointed out that lack of access to finance limits the scope for economic expansion of rural areas. The First Deputy Speaker, therefore, applauded the development and implementation of the RFPS which she believed would play a critical role in alleviating rural poverty provided its implementation was efficient. However, the First Deputy Speaker noted that seven years had passed since the RFPS was developed and questioned why it had taken long for the Ministry of Finance to create awareness about the document.

The Secretary to the Treasury in his speech highlighted some of the challenges faced in the space of rural finance which includes lack of consumer awareness and financial literacy on the demand side and low human resource competency in structuring appropriate financial services and products for rural and agricultural activities. He, therefore, pointed out that the RFPS aims to address these challenges. The Clerk of the National Assembly in her welcoming remarks

Report on the Dissemination of information about the RFPS (2012) 1 | P a g e commended the Ministry of Finance for recognizing Members of Parliament as important stakeholders in championing rural finance. She further assured the Ministry of Finance of full support from her office in facilitating future engagements with Members of Parliament.

2.0 OBJECTIVE The general objective for holding the three-day workshop was to enhance stakeholders’ awareness of the interventions put in place by the Government to improve access to and usage of quality financial products and services in rural areas.

3.0 DISCUSSIONS The discussions during the three-day sensitization workshop were centred around the existing policies supporting financial inclusion in Zambia, with a bias towards rural areas. However, particular prominence was accorded to the RFPS, being the mainstay of all rural finance initiatives in Zambia. To contextualize the provisions of the RFPS, RUFEP gave a presentation in which they highlighted their areas of intervention and how they are contributing to financial inclusion in rural areas, especially among women and the youth population.

3.1 Financial Sector Policy Landscape in Zambia To give an overview of the current national policy landscape of financial inclusion in Zambia, a presentation was made by the Financial Sector Policies and Management Unit (FSPMU) from the Economic Management Department (EMD) of Ministry of Finance. The presentation highlighted the recent financial sector reforms in Zambia and the existing financial sector policies. These included the National Financial Sector Development Policy (NFSDP) and the RFPS itself. Of paramount interest was the National Financial Inclusion Strategy (NFIS) which provides a roadmap for accelerating financial inclusion in Zambia. The vision of the NFIS is to have universal access to and usage of a broad range of quality and affordable financial products and services. In line with this vision, a national target has been set to increase the overall level of financial inclusion from 59% in 2015 to 80% by 2022.

The NFIS comprises four drivers. The first driver emphasizes having widespread and accessible delivery channels. This involves expanding the reach of agency and mobile banking, enhancing interoperability and increasing the overall quality of service provided by the financial service providers. The second driver brings out the need to have diverse, innovative and customer-centric products. This would result in improved quality and availability of financial services that are suitable to the needs of the majority. The third driver focusses on improving access to finance by the Small Medium Enterprises (SME) and the agricultural

Report on the Dissemination of information about the RFPS (2012) 2 | P a g e sectors. The fourth driver encourages financial consumer protection and capability. This would equip consumers with knowledge and confidence to engage with financial service providers.

3.2 Brief Overview of the Rural Finance Policy and Strategy A presentation was made by the Rural Finance Unit (RFU) which succinctly highlighted the conspicuous elements of the Rural Finance Policy and Strategy (RFPS). As defined in the RFPS, rural finance refers to financial services that focus on households and businesses in rural areas, encompassing both agricultural and non-agricultural activities and targeting poor and non-poor women, men and youths. It is important to note that rural finance and agricultural finance are not synonymous as the latter is sometimes considered a subset of the former. The vision of the RFPS is to have vibrant and well-resourced rural communities that enjoy prospects of sustained socio-economic development.

The RFPS is built on nine guiding principles which constitute the primary frame of reference regarding rural finance in Zambia. These include encouraging market-based approaches, supporting access to a variety of financial services and promoting a wide range of delivery channels and models which are relevant to the needs of the rural people. The policy further looks to promote consumer protection, support private sector demand-driven and innovative approaches as well as develop and support long-term strategies focusing on the sustainability of financial service providers. It is the Government’s goal to improve policy certainty and financial infrastructure to minimize the exposure of financial service providers to risks. The government also wishes to encourage evidence-based policymaking and foster effective policy dialogue mechanisms to develop, monitor and improve policies.

Included in the RFPS are six developmental objectives that the Government seeks to achieve in facilitating rural finance. Further, the policy is divided into three distinct policy focus areas namely macro, meso and micro levels. Each focus area has corresponding strategies that are aimed at guiding both the Government and the service providers in the provision of rural finance. At the macro level, the Government wishes to put in place appropriate regulatory and legislative framework to create a supportive institutional environment for rural finance provision, whilst encouraging market-based approaches. At the meso level, the Government wishes to have improved financial infrastructure, an increase in the flow of both demand and supply-side market information as well as enhanced development of market-driven skills. At the micro-level, the Government wishes to see financial service providers expanding their reach to rural areas. It further stresses the importance of supporting product innovation and the implementation of a market-driven financial education strategy.

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3.2.1 The Role of the Legislature in Rural Finance It is a fundamental role of the legislature to ensure that the executive is held accountable for any actions underlying policy pronouncements. It is important to note that the RFPS is a developmental policy that aims at reducing rural poverty and improving economic outcomes. Members of Parliament (MPs), especially those from rural constituencies are the direct representatives of the policy’s target population. This, therefore, puts the MPs in a better position to ensure that the needs of the people they represent are well addressed. Additionally, MPs can assist in ensuring that issues relating to financial inclusion are well embedded into the country’s development agenda as it is envisaged that a well-informed MP will prioritize and uplift rural finance, which severely constrains rural residents from rising above the poverty datum-line and therefore restricts the potential for economic development.

3.2.2 The Role of Government Line Ministries in Rural Finance It is important for Government Line Ministries to work in partnerships because most of them have overlapping mandates. Further, the Seventh National Development Plan (7NDP) has placed a premium on an integrated approach to tackling developmental challenges. Financial exclusion is no exception.

In order to promote access to financial services in rural areas, RFU can take advantage of the various projects and initiatives being implemented by different Ministries such as the Social Cash Transfer Programme under Ministry of Community Development and Social Services or the Farmer Input Support Programme (FISP) under the Ministry of Agriculture. Further, there are various policies and pieces of legislation under different Ministries that have a bearing on rural finance. These include the Co-operatives Societies Act and the Small Medium Enterprises (SME) Policy which is under the Ministry of Commerce, Trade and Industry. Lastly, it is important to conduct monitoring and evaluation (M&E) of all the rural finance interventions to assess if the set objectives of the RFPS are being actualized. Therefore, this calls for partnerships with the Ministry of National Development Planning and other line Ministries.

3.2.3 The Role of the Private Sector and Strategic Partners in Rural Finance The Government’s stated position is that the implementation of rural finance interventions will be led by the private sector while the Government creates a conducive environment through the development and implementation of the policy. By doing this, the private sector will be able to see the huge untapped market potential for financial services. Working through partnerships allows for the combination of resources and skillsets of different institutions in developing consensus-based ideas of driving the financial inclusion agenda. With the

Report on the Dissemination of information about the RFPS (2012) 4 | P a g e advancements in technology, traditional financial service providers have an opportunity to partner with financial technologies (Fintechs) in the delivery of specialized financial services.

3.3 The Rural Finance Expansion Programme The Rural Finance Expansion Programme (RUFEP) is an initiative by the Zambian Government under the Ministry of Finance. The program is jointly financed by the International Fund for Agricultural Development (IFAD) and the Government of the Republic of Zambia. The goal of RUFEP is to contribute to improved livelihoods of the rural poor through sustainable economic growth. The program is designed to provide interventions at the macro, meso and micro levels.

At the macro level, RUFEP endeavours to stimulate the development of conducive policies and strategies by working with RFU. At the meso level, RUFEP promotes the development of efficient support infrastructure for the financial sector by building both human and institutional capacity. The role of RUFEP at the micro-level is to stimulate demand-driven products and services to acknowledge the productive and economic potential of poor rural people.

4.0 SUMMARY AND RECOMMENDATIONS In summary, the stakeholders appreciated the initiative by the Ministry of Finance to disseminate information about the Rural Finance Policy and Strategy (RFPS). It was noticed that a good number of them were not aware that such an important document existed. Despite rural finance being a welcome initiative, several concerns were raised by the stakeholders. Firstly, it was noted that some years had passed since the policy was developed. Therefore, it was recommended that there was a need to review and re-align the policy and strategy with overarching developmental objectives as detailed in the Seventh National Development Plan. Secondly, it was observed that the Government needs to prioritize infrastructure development in rural areas to improve their accessibility and ease the cost of doing business. This would help in achieving the objectives of the RFPS. With respect to rural areas, it was proposed that much emphasis must be placed on the areas that are off the line of rail as they are the least served. Low levels of financial literacy in rural areas were cited as another factor that hampers the successful implementation of rural finance. This, therefore, calls for more concerted efforts in extending financial literacy campaigns to rural areas.

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APPENDICES i. Table of Questions Asked 1. Is it necessary to link Savings Groups with Financial Service Providers (FSPs), keeping in mind the high charges attached to the services of FSPs? 2. The RFPS was created in 2012, why was awareness about it being created in 2019? 3. Is there an implementation plan for the RFPS? 4. How achievable is rural financial inclusion when there is poor infrastructure to support it in rural areas? 5. Is there a chance of facilitating grants to MPs to support financial inclusion in rural areas? 6. Why are financial literacy campaigns not delivered first in rural areas before any thing? 7. As set out in the NFIS, how realistic is achieving 75percent financial inclusion in Rural areas by 2022? 8. Why was the sensitization workshop for all MPs, private sector and government line ministries not done in a day in order to harmonize efforts and encourage interactions? 9. How can cooperatives in rural areas access finance, as spelt out in the RFPS?

10. How do you define a rural poor? 11. Is there an effort by the Ministry to cover the cost of credit looking at the monetary policy? 12. Looking at the high levels of mobile money penetration and low profitability associated with it, what is being done? 13. Is the Government giving financial incentives to private sector to support rural finance initiatives? 14. On the financially excluded, do you include mobile loans for talk time? Are such people financially excluded? 15. With regards to low levels of trust in the financial system by the rural poor, is anything being done to address or encourage the trust levels? 16. What is the duration of the RFPS? So as to track progress and appraisal?

17. Is there a database on Rural finance in the country?

18. How are issues of collateral to borrow being addressed for rural areas?

19. What is the government doing to address issues of connectivity? as this severely restricts access to financial services. 20. What is RUFEP, and how successful has it been in addressing disparate levels of poverty in the country? What is there coverage area?

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ii. Action Plan S/N RECOMMENDATION ACTION RESPONSIBLE TIMELINE COMMENT INSTITUTION

Develop1 a Monitoring Develop the Ministry of 12 months Secretariat 1 and Evaluation Rural Finance Finance and already Framework for Rural M&E log Ministry of begun Finance frame and National process of develop Development developing indicators Planning the M&E anchored on framework theory of on rural change to sit finance on the E-wider related government activities. system.

Review literature on Identification Ministry of 6 months Activity is 2 Rural Finance for future of legal Finance on-going appraisal of the RFPS documents, policies and regulations related to rural finance

3 Review and appraisal of Review of the Ministry of 24 months MoF (RFU) the RFPS Rural Finance Finance to develop a Policy and road map for strategy to policy review harmonize it with other with current key trends and stakeholders. innovations 4 Creation of partnerships Review Ministry of 24 months MoF (RFU) for delivery channels available Finance, Ministry to take the opportunities of Agricultural, lead I this for PPPs and Ministry of process where possible Livestock and develop policy Fisheries, frameworks to Ministry of support PPP Commerce Trade collaboration and Industry in rural finance

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5 Strengthen Cooperatives Review Ministry of TBA MoF (RFU) and other market policies Finance, Ministry to engage the aggregators for supporting of Agricultural, MCTI to take enhancement of value creation and Ministry of the lead in supply chain in the rural strengthening Livestock and the review of finance ecosystem of cooperatives Fisheries, policy and and other Ministry of legal market Commerce Trade framework aggregators and Industry governing operations of the cooperatives and other market aggregators.

Report on the Dissemination of information about the RFPS (2012) 8 | P a g e iii. List of Delegates S/N NAME INSTITUTION DESIGNATION

1 Hon. Gift Chiyalika National Assembly MP- 2 Hon. Victor Lumayi National Assembly MP- 3 Hon. Charles M. Chalwe National Assembly MP- 4 Hon. Catherine Namugala National Assembly First Deputy Speaker 5 Hon. Credo Nanjuwa National Assembly MP- 6 Hon. Anthony C. Mumba National Assembly MP-Kantanshi 7 Hon. Stafford Mulusa National Assembly MP-Solwezi Central 8 Hon. Davies Chisopa National Assembly MP-Mkushi South 9 Hon. Frank Ng’ambi National Assembly MP- 10 Hon. Michelo Kasauta National Assembly MP-Bweengwa 11 Hon. Masautso K. Tembo National Assembly MP- 12 Hon. Robert Lihefu National Assembly MP- 13 Hon. Yizukanji Siwanzi National Assembly MP- 14 Hon. Sheal Mulyata National Assembly MP- 15 Hon. Ephraim Belemu National Assembly MP-Mbabala 16 Hon. Garry Nkombo National Assembly MP-Mazabuka 17 Hon. Darius Mulunda National Assembly MP-Siavonga 18 Hon. Joseph Kabamba National Assembly MP-Kafulafuta 19 Hon. Herbert Shabula National Assembly MP-Itezhi-Tezhi 20 Hon. Jewis Chabi National Assembly MP- 21 Hon. Rodgers Mwewa National Assembly MP-Mwansabombwe 22 Hon. Sililo O. Mutaba National Assembly MP- 23 Hon. Mwenya Munkonge National Assembly MP- 24 Hon. Maxwell Kabanda National Assembly MP- 25 Hon. Maria Langa National Assembly MP-Chilanga 26 Hon. Anthony Kasandwe National Assembly MP- 27 Hon. Jacob Siwale National Assembly MP- 28 Hon. Remember C. Mutale National Assembly MP- 29 Hon. Christopher Kalila National Assembly MP-Lukulu 30 Hon. Boyd Hamusonde National Assembly MP- 31 Hon. Whiteson Banda National Assembly MP-Milanzi 32 Hon. David M. Kundoti National Assembly MP-Luena 33 Hon. Anthony B. Malama National Assembly MP- 34 Hon. Makozo Chikote National Assembly MP-Luampa 35 Hon. Gerald Zimba National Assembly MP- 36 Hon. George Imbuwa National Assembly MP-Nalolo 38 Hon. Davison Mung’andu National Assembly MP-Chama South 39 Hon. Sebastian C. Kopulande National Assembly MP- 40 Hon. Machila Jamba National Assembly MP-Mwembeshi 41 Hon. Teddy J. Kasonso National Assembly MP-Solwezi West 42 Hon. Mubika Mubika National Assembly MP-Shangombo 43 Hon. Mundia Ndalamei National Assembly MP-Sikongo 44 Hon. Stan Kakubo National Assembly MP-Kapiri Mposhi 45 Hon. Stephen Miti National Assembly MP- 46 Hon. Prisca Kucheka National Assembly MP-Zambezi West

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47 Hon. Morgan Sitwala National Assembly MP-Kaoma Central 48 Hon. Brian Kambita National Assembly MP-Zambezi East 49 Hon. Peter Phiri National Assembly MP-Mkaika 50 Hon. Ambrose L. Lufuma National Assembly MP- 51 Hon. Chinga Miyutu National Assembly MP-Kalabo Central 52 Hon. Moses Mawere National Assembly MP- 53 Hon. Mbololwa Subulwa National Assembly MP-Sioma 54 Hon. Lawrence Sichalwe National Assembly MP- 55 Hon. Mwiinga C. Kabwe National Assembly MP-Chikankata 56 Hon. Ponde Mecha National Assembly MP-Chifunabuli 57 Hon. Misheck Mutelo National Assembly MP-Mitete 58 Hon. Elijah Muchima National Assembly MP-Ikeleng’i 59 Hon. Alfred Mandumbwa National Assembly MP-Mulobezi 60 Hon. Chilombo Chali National Assembly MP- 61 Hon. Leaky Kintu National Assembly MP-Solwezi East 62 Hon. Given Katuta National Assembly MP- 63 Hon. Jack Mwiimbu National Assembly MP-Monze 64 Hon. Mwansa Mbulakulima National Assembly MP- 65 Hon. Kalalwe Mukosa National Assembly MP- 66 Hon. Elias Mutale Mwila National Assembly MP- 67 Hon. Attractor M. Chisangano National Assembly MP-Gwembe 68 Hon. Emerine Kabanshi National Assembly MP- 69 Hon. Hastings S. Chansa National Assembly MP-Chimbamilonga 70 Hon. Salatiel Tembo National Assembly MP- 71 Hon. Emmerson Machila National Assembly MP-Magoye 72 Hon. Darious Mumba National Assembly MP-Chama North 73 Hon. Dr. Martin Malama National Assembly MP- 74 Hon. Prof. Geoffrey Lungwangwa National Assembly MP-Nalikwanda 75 Hon. Eliot Kamondo National Assembly MP- 76 Hon. Sensio Banda National Assembly MP- 77 Hon. Kapembwa Simbao National Assembly MP-Senga Hill 78 Hon. Derrick Livune National Assembly MP-Katombola 79 Hon. Doreen Mwape National Assembly MP-Mkushi North 80 Hon. Howard Kunda National Assembly MP- 81 Hon. Pilila G.M. Jere National Assembly MP- 82 Hon. Raphael M. Nakachinda National Assembly MP-Nominated 83 Hon. Dr. Mwilola Imakando National Assembly MP-Mongu Central 84 Hon. Leonard K. Fungulwe National Assembly MP-Lufwanyama 85 Hon. Fred Chaatila National Assembly MP-Moomba 86 Hon. Douglas Syakalima National Assembly MP- 87 Hon. Joseph Chishala National Assembly MP- 88 Hon. Romeo Kang’ombe National Assembly MP-Sesheke 89 Hon. Listed N. Tembo National Assembly MP-Kaumbwe 90 Hon. Peter Daka National Assembly MP- 91 Hon. Moono Lubezhi National Assembly MP-Namwala 92 Hon. Chushi Kasanda National Assembly MP- 93 Hon. Mirriam C. Chonya National Assembly MP- 94 Hon. Mwalimu Simfukwe National Assembly MP- Report on the Dissemination of information about the RFPS (2012) 10 | P a g e

95 Hon. Cornelius Mweetwa National Assembly MP-Choma 96 Hon. Mwimba Malama National Assembly MP- 97 Cecilia P. Banda MoHE 98 Ngao Nambao MLSS 99 Sakala Tamiyoni MoF 100 Joseph Tumba MoF 101 Norah M. Sichilongo MoF 102 Binta M.B. Chuunga MoHE 103 Emmanuel Sakanyi MoF 104 Muonga Kunda EAZ 105 Samson Mwanza ZAMTEL 106 Cephas Moonga RUFEP 107 Patrick M. Chuni Zambia Statatics Agency 108 Musenge M. Nsakilwa Medeem Zambia 109 Martin S. Mwiinga Bank of Zambia 110 Ezra B. Banda KZF 111 Kabuwa Mbulo ZNBS 112 Kizito Nyirongo MCTI 113 Gilead Musinga NATSAVE 114 Webby Mate AMIZ 115 Caiaphas Habasonda RUFEP 116 Justine Charela NATSAVE 117 David Mukwavi NATSAVE 118 Angela Lihusha EFC Zambia 119 Mabvuto Zulu World Vision Zambia 120 Ruth Mitimingi Habitat for Humanity 121 Nelly Nambule MoF 122 Sepo Mate MFL 123 Kennedy Mukuka BoZ 124 Chiziya Kashimu VITALITE 125 Joseph M. Chikolwa ZNBS 126 Susan Chibonga Agora 127 Boyd Simpungwe EAZ 128 Peter Lungu Medeem Zambia 129 Mubanga Chama SaveNet 130 Tamara Bilima ZIPAR 131 Kambili Chilufya ZESCO 132 Mildred Stephenson Transunion 133 Nelia Mulenga MFL 134 Chizela Felix MoF 135 Mulula Kunda SUPAMOTO 136 James Chona Airtel 137 Derrick M. Simukoko MoF 138 Muntanga Mukelabai MoF 139 Brenda C. Chanda MoF 140 Eric Nsofu MoF 141 Mwansa Mwape MoF 142 Boniface Mahamba MoF Report on the Dissemination of information about the RFPS (2012) 11 | P a g e

143 Chabala Luswili MoF 144 Aissata Bah Aidara MoF 145 Kapansa Sikazwe MoF 146 Sydney Ng’andu MoF 147 Chimuka Nachibinga CSPR 148 Dr. Nswana M.F. Cabinet Office/DS 149 Natasha Ndhlovu MoL 150 Walusungu Banda CEEC 151 Kawama G. Simumba MoF 152 Getrude K. Chisengalumbwe MLSS 153 Stephen Mbewe MTC 154 Gracious Bamanay DBZ 155 Chimuka Mweetwa PACRA 156 Brian Ng’andu MoA 157 Angester Milatu Cabinet Office 158 Brain Moonga MCTI 159 Amy Volk MCTI 160 Darius Mpundu MCTI 161 Miriam Nkhungulu MNDP 162 Grevazio Kapanda CCPC 163 Dr. Nkumbu Nalwimba MoA 164 Isaac Sakala AFRICARE 165 Mutinta Dinde MoF 166 Brenda Mwanza BoZ 167 Mutumboi Mundia SEC 168 Mubanga Kondolo SEC 169 Paul Munyinda BoZ 170 Sharon Machayi ZICTA 171 Yunike Zulu Mutale Min. of Gender 172 Dr. Evelyn Tembo Min of Gender 173 Chibwe Salati EU Delegation 174 Mulenga Chama MoF

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