THIS REPORT WAS PRODUCED BY THE CENTRE FOR FINANCIAL REGULATION AND INCLUSION (CENFRI) AUTHORS Hennie Bester, Christine Hougaard, Wadzanai Machena, Catherine Denoon-Stevens, Waqas Rana, Comfort Phelane, and Jaco Weideman. In-country support & stakeholder coordination: Africa Corporate Advisors (ACA). PARTNERING FOR A COMMON PURPOSE Making Access Possible (MAP) is a multi-country initiative to support financial inclusion through a process of evidence-based country diagnostic and stakeholder dialogue, leading to the development of national financial inclusion roadmaps that identify key drivers of financial inclusion and recommended action. Through its design, MAP seeks to strengthen and focus the domestic development dialogue on financial inclusion. The global project seeks to engage with various other international platforms and entities impacting on financial inclusion, using the evidence gathered at the country level. The MAP methodology and process has been developed jointly by United Nations Capital Development Fund (UNCDF), FinMark Trust (FMT) and the Centre for Financial Regulation and Inclusion (Cenfri) to foster inclusive financial sector growth. At country level, the core MAP partners, collaborate with Government, other key stakeholders and donors to ensure an inclusive, holistic process. MAP Zimbabwe was funded by FinMark Trust and produced by Cenfri. ACKNOWLEDGEMENTS The authors would like to extend their gratitude to all of those who assisted us in compiling this report. The Ministry of Finance and Economic Development (MOFED) and Reserve Bank of Zimbabwe. The other members of the MAP Steering Committee including representatives from the Ministry of Finance, the Reserve Bank of Zimbabwe, Insurance and Pensions Commission (IPEC), Zimbabwe National Statistic Agency (ZIMSTAT), Ministry of Industry and Commerce, Ministry of Small and Medium Enterprises and Cooperative Development (MSMECD), Consumer Council of Zimbabwe (CCZ), Securities Exchange Control of Zimbabwe (SECZ), Post and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), Bankers Association of Zimbabwe (BAZ), and Zimbabwe Association of Microfinance Institutions (ZAMFI). The FinMark Trust country coordinator, Africa Corporate Advisors, supplied indispensable insights and assistance throughout the MAP process: organising countless meetings, conducting research, arranging mystery shopping exercises and providing us with insight into Zimbabwe and its people. Finally, we would like to thank the various people we met with from government, financial services providers, industry bodies, technology providers, telecommunications operators and donor agencies for their time, the critical insights that guided this research and their efforts to extend financial services to the excluded. i Table of Contents List of Abbreviations and Acronyms ............................................................................................ i Executive summary .................................................................................................................. vii 1. Introduction ........................................................................................................................1 1.1. What is MAP? .............................................................................................................1 1.2. Background .................................................................................................................1 1.3. Rationale for MAP in Zimbabwe .................................................................................2 1.4. Methodology ..............................................................................................................2 1.5. Structure .....................................................................................................................3 Part A. Setting the scene ............................................................................................................4 2. Context drivers for market development ...........................................................................4 2.1. Snapshot: An economy in crisis – and people rising to the task ................................4 2.2. Historical context ........................................................................................................8 2.2.1. The 1980s –Social investment ......................................................................... 10 2.2.2. The 1990s – Economic reform and decline ..................................................... 12 2.2.3. The 2000s – Economic contraction, hyperinflation and stabilisation ............. 13 2.2.4. Summary .......................................................................................................... 20 3. Policy and regulatory framework .................................................................................... 21 3.1. Policy environment .................................................................................................. 22 3.1.1. Macro policy .................................................................................................... 22 3.1.2. Financial sector development policy ............................................................... 25 3.1.3. Financial inclusion policy ................................................................................. 26 3.2. Regulatory framework ............................................................................................. 27 3.2.1. Legal system .................................................................................................... 28 3.2.2. Short overview of the financial sector regulatory landscape .......................... 29 Part B. Understanding customer needs .................................................................................. 36 4. Segmenting the target market ........................................................................................ 36 5. Current uptake of financial services ................................................................................ 41 5.1. Overall usage ........................................................................................................... 41 5.2. A product market view ............................................................................................ 45 5.3. A target market view ............................................................................................... 49 6. Is usage meeting customer needs? ................................................................................. 51 6.1. What is a need case? ............................................................................................... 52 6.2. Main need cases in Zimbabwe ................................................................................ 53 6.2.1. Payments need cases ...................................................................................... 56 6.2.2. Consumption smoothing ................................................................................. 58 6.2.3. Education ......................................................................................................... 60 6.2.4. Risk mitigation ................................................................................................. 62 6.2.5. Encashment ..................................................................................................... 63 6.2.6. Asset accumulation ......................................................................................... 65 6.2.7. Providing for agricultural inputs ...................................................................... 67 6.3. How do needs differ across the segments .............................................................. 67 Part C. The market response ................................................................................................... 71 ii 7. How do people view financial services? .......................................................................... 71 8. Supply-side overview ....................................................................................................... 73 8.1. The supply response to consumer needs: overview ............................................... 74 8.2. Provider-specific overview ...................................................................................... 84 8.2.1. Banks................................................................................................................ 84 8.2.2. Mobile money operators (MMOs) .................................................................. 89 8.2.3. Insurers and retirement funds......................................................................... 92 8.2.4. Microfinance institutions (MFIs) ..................................................................... 95 8.2.5. Informal moneylenders ................................................................................... 97 8.2.6. Community groups .......................................................................................... 97 8.2.7. Money transfer operators (MTOs) .................................................................. 98 8.2.8. Capital markets ................................................................................................ 99 9. Product markets ............................................................................................................ 101 9.1. Market for credit ................................................................................................... 101 9.1.1. Need