HARARE: Zimbabwe has the most dynamic digital financial services environment in Sub-Saharan Africa, a World Bank official has said.
But the country’s fast expanding digital financial services environment requires corresponding development of consumer protection regulation and financial literacy training.
World Bank senior financial specialist Ms Rosamund Grady said this at the launch of the ‘Zimbabwe Consumer Protection and Financial Literacy (CPFL) Diagnostic Final Report’ in today.
“You have got three mobile network operators (MNOs) operating financial services, and there are all sorts of services being offered and these are constantly evolving. You have got payment services, you can a loan off your mobile phone, sales transactions, insurance services being offered through your mobile phone, life insurance, funeral insurance, debit cards, remittances….so lots and lots of innovation, more than we have seen in other countries,” she said.
“These issues (consumer protection and financial literacy) become particularly important in an environment where you seeing how financial services are delivered, particularly the case with Zimbabwe. One critical issue has to do with the consumer protection law particularly with regards to the use of mobile financial services . your environment is incredibly dynamic, it’s one of the most dynamic in the whole African continent
“So when you have all this change happening, careful consideration on issues of consumer protection and financial literacy is required, and these are critical in the Zimbabwean context,” said Ms Grady.
According to figures given by Ms Grady, as at May 31 this year, the three MNOs (Econet, Telecel and NetOne) had over 29 000 agents working for their digital financial platforms, up from 14 000 same period last year.
An earlier World Bank Findex study showed that Zimbabwean adults using mobile phones for financial services stood at 21,6 percent, compared to a Sub-Saharan Africa average of 11 percent.
Zimbabwe’s digital financial services platform has contributed significantly to the rise in financial inclusion in the country as banks have remained largely inflexible to consumer demands and broader technological developments.
Unbanked Zimbabweans are increasingly gaining access to financial services through digital financial channels, especially EcoCash, Telecash and OneWallet.
Additionally – albeit to a lesser extent – the traditional banks themselves, microfinance institutions and other providers are using mobile phones and point-of-sale devices, along with networks of small-scale agents, to offer basic financial services at greater convenience and lower cost than traditional banking allows.
The World Bank senior financial specialist said there are a number of gaps in the overall legal framework that needed to be addressed if the country is to ensure effective consumer protection.
“Essentially we recommended that there be capacity-building on consumer protection laws and that they bring together all these different regulators and supervisors and have some sort of coordinated consultation committee so that you can get consistent regulation across the financial services sector
“We also believe that the most effective way of regulating this area is to regulate activities than institutions, for instance the rules regarding a particular activity such lending should apply to all financial services providers from the big commercial banks to the smaller.”
Ms Grady also noted that none of the regulators that they observed, namely the Insurance and Pension Commission (IPEC), the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) and the Consumer Council of Zimbabwe (CCZ) among other had an explicit mandate on financial services, which requires re-dress.
She also suggested that the Consumer Protection Bill – which is presently being developed under the ambit of the Ministry of Industry and Commerce – should include a section that covers financial sector regulation. – BH24
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