Zimbabwe Financial Inclusion Remains Low
Zimbabwe, June, 19 2013 -
Not more than two in every 10 Zimbabweans employed by micro, small and medium enterprises conducts business through the formal banking system as the level of financial inclusion remains low, a government commissioned report has shown.
REPORT BY ACTING BUSINESS EDITOR
According to the FinScope Micro, Small and Medium Enterprises on Zimbabwe, the thriving sector is a source of livelihood for 5,7 million people and out of this 2,8 million were individual entrepreneurs.
The report, which will be launched today by the Ministry of Small to Medium Entreprises, sums up information gathered from 3222 face-to-face interviews. It is a comprehensive study focusing on individual entrepreneurs, and owners of micro-, small- and medium enterprises (MSMEs) and their financial services needs in Zimbabwe.
Mashonaland East has the highest proportion of MSME owners compared to the total adult population (56% of adults are MSME owners) while Harare has the lowest proportion of MSME owners (only 38% of adults are MSME owners) – probably due to the availability of other income-generating activities/salaried jobs, the report said.
The survey revealed that business owners who have, or use financial products for business purposes remain subdued due to low income as well as irregular income inflows. This means that cash related transactions were the most common within the sector. This came at a time independent reports showed that over $3 billion was circulating outside the formal banking system.
“(The report shows that) 14% are banked, but only 3% use an account in the name of the business. 72% save, mainly at home (53%) and through informal groups (42%),” read the report.
Experts contended that the rapid growth of small to medium enterprises indicated the level of de-industrialisation confronting the manufacturing sector since the introduction of multiple currencies in 2009.
The report showed that 40% of MSME owners earned less than $200 per month but the sector played a vital role of survivalist businesses which buffered against slipping deeper into poverty.
Access to credit or loans, according to the report, remained the key constraint to start-up, operation and growth. To minimise lending risks, government should speed up the setting up of a credit bureau to ensure responsible credit provision.
Micro enterprises, according to the report, employed up to five workers while medium enterprises have a staff complement of up to 75.