KALONDE NYATI, Lusaka
MONICA Tembo is a micro scale entrepreneur, who been involved in the selling of food stuff from one company to another for over 15 years, and has never owned a bank account because of what she described as bulky documentation required by commercial banks.
A few years ago , Ms Tembo would spend all her profit or keep it in the house but the era of digital financial services (DFS) especially mobile money platforms has enabled her save money ,transact and reduce on carrying a lot of cash when going to purchase merchandise for resell.
“I opened a mobile money account because the process was easy, all the agent asked for was my National Registration Card number unlike conventional banking, which requires a number of documents, which I find to be inconveniencing,” she said in a recent interview.
Ms Tembo uses DFSs when going out of town to order merchandise and this reduces the risk of money being stolen on the way.
“All I do is withdraw money at the agent nearest to where am going to buy my merchandise,” she said.
Ms Tembo is among the 1.3 million active customers utilising DFSs in the country and these services range from mobile money platforms, e-wallets, among others.
According to United Nations Capital Development Fund (UNCDF), the number of customers using DFSs increased to 1.3 million last year from one million the previous year while the number of agents increased to 12,376 from 7,304 in the period under review.
The most common mobile money platforms that are being utilised are Zoona, Airtel Money, MTN Mobile Money, which also operates a mobile money based credit product in partnership with Jumo dubbed ‘ Kongola’ and the recently launched Zamtel Mobile Money.
Although the use of DFSs has been growing over the years and playing a critical role in accelerating financial inclusion in the country, penetration in Zambia remains low compared to countries such as Tanzania, Kenya, Uganda, Zimbabwe, Botswana and Rwanda.
Notable reasons cited for low penetration include inadequate expansion and management of agent network, where service providers have highlighted the challenges related to developing cost-effective and sustainable agent network management structures especially in rural areas.
Low levels of consumer awareness and education on new and existing products that result in high inactivity rates within the customer base, limited resources to unlock more investment in rural areas and inadequate network coverage, low mobile phone penetration and lack of electricity to charge phones remain challenges to accelerating DFSs.
Recently, Bank of Zambia deputy governor in charge of operations Bwalya Ngandu also noted that high transaction fees levied by various financial service providers continue to affect the growth of the services.
Dr Ngandu said high levels of agent exclusivity puts a lot of pressure on the agents to achieve a critical mass of customers and transactions.
“Financial service providers should adopt a shared agent model, a move that will increase the revenue and most likely the motivation for agents.
“This is particularly important for the agents in rural areas. Lack of awareness of DFS products that are available on the market also poses a challenge. There is need to increase awareness of DFS and service providers should use several channels to market their products,” he said.
According to the survey carried out by the Helix Institute of Digital Finance/Microsave, Zambia has high levels of agent exclusivity (91 percent) compared to other countries in Africa.
Dr Ngandu also said that there is need to watch out for cybercrime while ensuring that DFSs play a big role towards the attainment of the targets set out in the National Financial Inclusion Strategy.
“New risks such as cybercrime that come with the digital era, will have to be mitigated and monitored. However, there is need to ensure that regulation to mitigate the risk is proportionate to the risk as over regulation may stifle innovation. Thus, there is need to strike an appropriate balance,” he said.
UNCDF regional technical specialist Nandini Harihareswara also observes that despite Zambia being the earliest adopter of DFSs in Africa in 2002 ,it has lagged behind in leveraging the services to advance financial inclusion services for many years resulting in UNCDF launching the mobile money for the poor (MM4P) programme to increase penetration especially among the rural communities.
MM4P was created to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low income people in least developed countries.
Ms Harihareswara is however, upbeat of the enhancement of financial inclusion through DFSs saying the initiative will continue to complement conventional banking.
She said UNCDF recently organized the first-ever annual digital awards dubbed ‘Chikwama’ aimed at awarding entities and individuals promoting the DFSs in the country.
This year’s awards was scooped by, MTN Zambia, which got the best mobile money provider, and the most innovative digital financial service provider went to First National Bank while the agent value chain development was won by Zoona and DFS private sector champion went to Robert Keating .
Ms Harihareswara also said Zambia is among three African countries benefiting from the US$25 million programme that aims at accelerating DFS through technical support to service providers.
“The US$ 25 million project will run for five years and is supported by the Master Card Foundation, and is also benefiting Senegal and Benin. In Zambia, the project is providing support to Airtel, Zoona, Kazang and MTN. We also engaging other entities,” she said.
She also urged DFSs to consider extending trading hours to enable the public have access to funds after working hours and this could be done by partnering with agencies such as Filling Stations that operate beyond working hours.
“Some digital financial services operate up to 17 hours and up to lunch time during weekends thus making it impossible for the public to access finance,” she said.
Providing access to financial services to underserved populations through the mobile phone is a key enabler in attaining the sustainable development goals because nearly two-thirds of the world’s 7.5 billion people have a mobile phone.
Therefore, digital financial services becoming a gateway for those who have been historically excluded financially like Ms Tembo.