Columnists

Step towards financial inclusion

EMELDA Musonda.

Analysis: EMELDA MUSONDA
THE bold step taken by Bank of Zambia to abolish unnecessary bank charges is commendable and a necessary step to promote financial inclusion.
Last year, Government launched a comprehensive national financial inclusion strategy to accelerate progress towards inclusive, stable, and competitive financial sector development in Zambia.
The strategy was developed to build on the successes of Zambia’s first and second Financial Sector Development Plans (FSDPs), which ran into two successive five-year cycles from 2004 to 2009, and from 2010 to 2014.
The strategy is anchored on the national vision “to achieve universal access and usage of a broad range of quality and affordable financial services that meet the needs of both individuals and enterprises”.
According to the strategy by 2022, Zambia must have 70 percent of adults using formal financial services from the current 38 percent (according to 2015 statistics).
Secretary to the Treasury Fredson Yamba stated in the preamble to the national financial inclusion strategy that irrespective of one’s social or economic status, gender, or level of education, every segment of the Zambian society must have access to basic financial services.
Government acknowledges that access to and usage of a broad range of quality and affordable financial products and services has potential to open up opportunities for better livelihoods.
It provides a platform for low-income populations with the mechanisms to borrow, save and invest, and make payments.
While Government, through the Central Bank, has been strategising on how to ensure financial inclusion, the financial sector as a key player has not been helpful.
To satisfy their insatiable appetite for more profits, banks have over time subtly introduced numerous service charges.
Many clients, particularly those who are enlightened, have time and again complained of the excessive and numerous bank charges that have been obtaining.
The charges have been prohibitive and an injury to the spirit of financial inclusion.
While it seemed as though banks have been untouchable as they subjected clients to unfair trading practices, it is good that “Big Brother” in the name of the Central Bank has shown up.
Many stakeholders were full of commendations for the Bank of Zambia and justifiably so.
Banks cannot continue to abuse clients by coming up with all sorts of charges, many of which were probably not even known by those affected.
Whatever the case, these charges made banking extremely expensive to the exclusion of many, especially the rural populations.
There is a high possibility that many people reverted to the old ways of keeping money in pillows, trunks and so forth, for fear of losing out to the banks through unwarranted charges.
It is good that all those unnecessary charges that traumatised clients are now a thing of the past.
According to a Government Gazette number 6693, BoZ Prohibition against Unwarranted Bank Charges and Fees of 2018 was promulgated into law last week.
This entails that no bank is now allowed to impose unwarranted charges on clients.
It is commendable that Bank of Zambia did not leave chance to banks to manipulate clients’ ignorance, by publishing a list of 26 charges that have been scrapped off and these are:
• Account opening for both local and foreign currency.
• Over the counter cash deposit and withdrawal (where amount and or denominations being withdrawn cannot be dispensed by the ATMs).
• Charge for cash deposit made by a third party into a customer’s account.
• Automated Teller Machine surcharge.
• Charge for cash deposit on ATMs.
• Charge for aborted ATM cash withdrawals.
• Charge for ATM pin reset.
• Charge on basic savings account (without cheque book) operating within contractual terms.
• Monthly maintenance fees on basic savings accounts without cheque book.
• Charge for transfer of funds between retail accounts domiciled in the same bank.
• Charge of transfer of an account from one branch to another of the same bank.
• Point of Sale (POS) transaction for own bank customers and other bank customers.
• Additional charges arising from an initial charge generated by the bank (where a customer’s account has been overdrawn by a debit transaction initiated by the bank, the customer will not incur charges for the overdrawn balance).
• A charge for closure of a customer’s account, which has operated for more than six months.
• Charge for re-activating a bank account.
• Charge for statement of account upon closing of the account, provided a customer has not received a free statement for the month.
• Charge for monthly account statement (customers are entitled to a free statement per month. However, may apply for any additional statement.
• Charge for balance and other account inquiries by a customer over the counter or any electronic platform.
• Initial debit card issuance fees
• Debit card maintenance and renewal fees (annual, quarterly or monthly).
• Charge on inward local fund transfers, including RTGS system and Electronic Funds Transfer (EFT).
• Charge on inward international funds transfer where the remitter bears the full cost.
• Charges for amendment or cancellation of a standing order.
• Ledger fees per entry on a current or savings account.
• Commission on turnover activities on the account
• Fees on debit transactions.
While banks are legally required to scrap off the above charges, chances are that there are some who will be hesitant to comply given the perceived financial loss.
The public should therefore be vigilant and report any bank that does not comply.
The BoZ should also do random checks to ensure that banks are complying.
It is indisputable that with the elimination of unnecessary bank charges, the country has moved a step towards financial inclusion.
The Central Bank should now move another step to address the issue of high interest rates.
The author is Zambia Daily Mail editorials editor.

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