The Sunday Mail
Livingstone Marufu
GOVERNMENT has instituted measures to promote rapid establishment of financial institutions in rural areas within the next four years as a way of increasing both human and infrastructural development.
According to the latest Finscope Survey, 70 percent of Zimbabweans are in rural areas and only 23 percent of that population is formally banked, compared to 46 percent of the urbanites.
Government recently launched the National Financial Inclusion Strategy to promote and improve accessibility of finance in rural areas.
Last week, Finance and Economic Development Minister Patrick Chinamasa told The Sunday Mail that the strategy formed the foundation of an exercise to ensure rapid setting up of formal financial institutions in rural areas by 2020.
“Financial exclusion is higher in the rural areas than in urban areas due to limited accessibility to banks, other financial institutions and minimal formal salaried employment opportunities,” he said.
“Inaccessibility is further compounded by the long distance to the nearest access point, high cost of accessing financial products, services bank charges and stringent account opening requirements.
“The National Financial Inclusion Strategy seeks to put forward measures aimed at improving financial access in rural areas by ensuring the building of sustainable financial institutions and increased presence of formal financial institutions.
“In addition to consumer education programs that will be embarked on, the Reserve Bank in collaboration with financial institutions and other stakeholders, will work on increasing financial access points in rural areas.”
According to a Finscope Micro, Small and Medium Enterprises (MSME) Survey, rural areas account for 66 percent of the MSMEs in the country, but the majority of these are financially excluded and use informal financial products and services only.
Minister Chinamasa said enhancing the accessibility of bank loans will boast the livelihoods of the majority of the rural population who mainly rely on agriculture.
“Government is committed to the creation of an enabling environment for commercial banks, microfinance institutions and other financial services providers to play their role in supporting rural and agricultural activities,” he said.
“The targeted financing schemes for agriculture and rural areas which have been implemented in the country to date have not been effectively coordinated or lacked clear guidelines for implementation, or failed in the implementation phase, hence the impact of such initiatives has been limited.
“Government, the Reserve Bank of Zimbabwe, and financial institutions will establish a revolving fund, with the assistance of international development financial institutions, to finance agricultural activities with greater focus on smallholder farmers.
Zimbabwe has an Agricultural and Rural Credit Policy, but it’s implementation has been hampered by lack of buy in from financial institutions.
Most farmers still lack skills to enhance the bankability of their activities.
