Dissemination Meetings for the Rural Finance
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Republic of Zambia 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 Catherine Namugala, 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