'Technology advancing financial inclusion in Zim'

HARARE - The rapid diffusion of mobile phones in Zimbabwe is helping the previously marginalised and unbanked citizens to participate in the country’s economic growth through financial inclusion.

According to experts, mobile phones and other information and communication technology gadgets have the potential to promote economic growth because they encourage capital accumulation, improve firms’ productivity, and favour larger and better functioning markets.

Reserve Bank of Zimbabwe governor John Mangudya said the increased use of mobile financial services has significantly improved the availability of financial products to the previously-unbanked segments of society.

“Within this context, providers of financial services are urged to continue embracing technology so as to reach out to marginalised communities,” he said.

This comes after the Postal and Telecommunications Regulatory Authority of Zimbabwe recently said the country’s mobile penetration rate currently stands at 106 percent with about 13,5 million mobile phone subscribers.

The number has grown dramatically from just five million in 2009 when the country started using the United States dollar.

According to statistics unveiled by Potraz, there are currently more than five million people with access to the Internet in a population of just over 13 million according to a 2012 census.

ICT specialist Cynthia Kanoyangwa said mobile phones play an important role in promoting financial inclusion.

“Mobile telephone allows expansion and access to financial services to previously underserved groups in developing countries,” she said adding that it reduces transaction costs, especially the costs of running physical bank branches.

“The increasing use of mobile phones in developing countries has contributed to the emergence of branchless banking services, thereby improving financial inclusion.

“This increased access to financial services for underserved people helps narrow the financial infrastructure gap, especially in Zimbabwe, where the costs of distance and time are very high for formal banking services,” she said.

Kanoyangwa noted that ICTs favour better information flows, and the data collected on depositors can be used to analyse credit worthiness more efficiently and to facilitate deposit taking.

“Therefore ICT and mobile phone in particular improve access to credit and deposit facilities, allow more efficient allocation of credit, facilitate financial transfers, and boost financial inclusion.

“In turn, this would stimulate private investment, and hence economic growth,” she said.

A recent study by the International Monetary Fund (IMF) revealed that better ICT development also reduces the cost of financial intermediation and contributes to the emergence of branchless banking services, therefore improving access to finance for households that would be credit constrained otherwise.

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