Nixon Chekenya
“My dream is to find individuals who take financial resources and convert them into changing the world in the most positive ways.” — Jeff Skoll.
THERE are new business opportunities in rural markets, but there is need for a paradigm shift in the way businesses should approach these markets.
There should be a healthy mix between business opportunity and social impact — making money whilst impacting lives.
Professor Arthur Mutambara once said: “Come and make money in Africa, but also make a difference.”
Despite all the challenges, there are bright spots in Zimbabwe, and, better still, in the rural areas.
One clear problem in the rural areas is missing markets, missing credit markets and missing input and output markets.
Combining these with unemployment, HIV, poverty, starvation, inequality, low financial inclusion, it seems like we do not have a chance.
How about looking at these problems as opportunities by turning these human needs/problems into business opportunities?
In 1994, an estimated 70 percent of Africans had never heard a phone ring. Fast forward to today, at least 73 percent of Africans own a mobile phone.
Telecommunications giants like MTN and Econet are making billions of dollars by addressing this human need.
Seventy percent of Zimbabweans do not have bank accounts (World Bank, 2024).
One may come in and provide banking services for rural people, which is a human need, but also make cash out of it.
Making money by doing good should be the new norm.
Creativity, innovation and persistence are necessary in addressing problems in rural markets.
What is also needed is making sure what I call the ABCs of enhancing financial inclusion in rural markets are in place.
These include:
Supporting basic financial education
Promoting financial inclusion among rural households should involve basic financial education. Making financial education conversations central to servicing these markets can generate long-term gains.
These conversations can focus on the content of financial education curricula to better reflect and respect values and realities of rural communities which are often overlooked.
Know Your Customer (KYC)
Presenting KYC documents in vernacular would greatly enable financial inclusion in rural areas. While English is the widely spoken language in Zimbabwe, there are more than 16 official languages in the country. It may help to present KYC information in local languages — speaking their language.
Collateral substitutes
Collateral is traditionally used by banks and other MFIs (micro finance institutions) to reduce the risk of strategic default in cases where a borrower can divert cashflows (Bond and Rai, 2002). Rural-based financial institutions are faced with the twin challenges of operating in markets where collateral is scarce and diversion is easy. In the absence of collateral, the use of social sanctions, destroying their social reputation and credit denial on defaulting borrowers can work as collateral substitutes. The morality and
efficiency of these as perfect substitutes may warrant further empirical examination.
Customised products
Customised financial products and services can address the specific needs of rural people. The way you service New York is not the same way you service Rota village. The products have to be timely, specific and relevant to rural markets.
Trust
Trust is the bedrock upon which the financial services industry thrives. This trust can be fostered by honesty, stability, transparency, respect and client satisfaction. Without trust, it is difficult to start and maintain financial transactions. Trust builds loyalty. While levels of trust are relatively low in Zimbabwe’s financial services industry, it may help to be optimistic. One has to acknowledge that this is particularly challenging, especially during volatile environments like the one prevailing in Zimbabwe. Trust optimises capital and savings allocations to financial investments.
Take advantage of social structures
Mukando — a Shona word for “to throw into one pot” — is a cooperative concept in which group members constitutionally agree to contribute equal amounts of money on a revolving basis or borrow with interest. It’s also known as Skokvel (in Afrikaans) or Round (in English). Mukando has become a popular savings concept in Zimbabwe and enables members to access capital by saving small amounts of money. Financial institutions can help Mukando groups to commercialise their operations through facilitating acquisition of stands and properties from such proceeds or arrange group lending facilities.
It won’t be easy. It is the work of a lifetime. If people are willing to roll up their sleeves and get into the dirt and do something, it is doable.
There are many things that can make life worth living. Impacting other people’s lives in a positive way is certainly one. What is needed is people who are going to take the heat and focus their energy on creating and distributing great and best products for rural customers.
*Nixon Chekenya is a lead research fellow & teaching assistant at the Department of Agricultural & Applied Economics (W. Davis College of Agricultural Sciences & Natural Resources)
