daniel chigunwe
CBZ Holdings says it is developing products and solutions targeted at the informal sector as part of the group’s focus on financial inclusion.
The country’s informal sector, which now constitutes the bulk of economic activity, remains largely unbanked and out of most formal financial services channels.
Group chief executive officer Lawrence Nyazema, in a recent interview, said the group’s financial inclusivity will be expanded not only through the bank but also through any of the group’s business units, such as insurance.
“On financial inclusion, we are coming up with products and solutions that bring inclusivity, and these will come through across all the businesses that we operate,” he said.
He said the banking sector needs to come up with solutions that draw tenable deposits from the informal sector.
“When somebody goes to a fast-food outlet, they take their informal money, they buy fast food, the deposit comes, but the deposit quickly disappears.
“Therefore, we need to find ways of keeping those informal sector deposits so that our overall deposits go up,” he said.
Nyazema said the group will be developing products in insurance and agriculture targeting the informal sector.
However, experts contend that Zimbabwe’s high cost of compliance is incentivising informalisation, and the mandatory regulatory environment remains tough even for new businesses and investors, resulting in some exploring loopholes to avoid compliance.
CZI president Mucha Mkanganwi, speaking at the post-budget meeting, recently said incentivising informal players through asset protection, rights entitlements, and benefits tied to formalisation could encourage them to transition.
“The high cost of formalisation is a significant barrier. Instead of focusing on how to tax the informal sector, we should prioritise making formalisation attractive. Conditional incentives such as social insurance schemes could be an effective starting point,” he said.
This is, however, different from a Government approach of instituting several tax heads and penalties in an effort to drive formalisation.
Farai Mutambanengwe, founder and chief executive of the SME Association of Zimbabwe, said the current tax regime discourages formalisation.
Due to the importance of financial inclusion, the government first developed and implemented the National Financial Inclusion Strategy (NFIS), which ran from 2016 to 2020, and the country is now in the second phase of the NFIS, which began in 2022 and will run till 2026.
Zimbabwe has made notable strides in reducing the number of unbanked individuals in the country through various initiatives and will continue to take advantage of technology to roll out further financial inclusion interventions.
Financial technology plays a key
role in providing financial services to all levels of society, underserved or marginalised groups including women and youths, micro, small, and medium enterprises (MSMEs), rural communities and
smallholder farmers, people with
disabilities, pensioners, and the elderly. — BH24
Bongani Ndlovu