Harare, 16 February 2015. FinMark Trust launched the results of the FinScope Consumer Survey Zimbabwe 2014 today. The FinScope Survey 2014 is a follow-up to the first survey which was done in 2011. The FinScope surveys done in Zimbabwe (FinScope Consumer Survey 2011 and FinScope MSME Survey 2012) not only enabled the assessment of the landscape of financial access but also provided a benchmark for repeat surveys in order to enable the assessment of the impact of access-related policy initiatives. The FinScope Survey, developed by FinMark Trust, is a research tool to assess financial access in a country and to identify the constraints that prevent financial service providers from reaching the financially under- and unserved people. The FinScope Survey is a nationally representative survey of how adult individuals source their incomes and how they manage their financial lives. It also provides insight into attitudes and perceptions regarding financial products and services. The FinScope Consumer Survey Zimbabwe 2014 survey involved a wide range of private and public sector stakeholders who were engaged in a comprehensive consultation process, thereby enriching the survey.
To date, FinScope Consumer Surveys have been conducted in 20 countries including Zimbabwe. The survey was carried out under the auspices of the Ministry of Finance and Economic Development (MFED) and funded by FinMark Trust. The sampling frame and weighting of the data was conducted by Zimbabwe National Statistics Agency (ZIMSTAT).
The study was based on a nationally representative sample of adults who are 18 years or older. A total of 4000 face-to-face interviews were conducted by Research Continental-Fonkom while Africa Corporate Advisors were the local project coordinator. The sample is representative at national, urban/rural, and provincial levels.
Below are some of the highlights from the 2014 survey.
Changes in livelihoods
There have been major changes in the population profile of Zimbabwe between 2011 and 2014 with a decrease in the urban population from 35% in 2011 to 30% in 2014 and an increase in the male population from 40% in 2011 to 43% in 2014. Improvements in education have occurred, with the percentage of those with no education decreasing from 7% in 2011 to 3% in 2014. Access to piped running water has decreased from 35% in 2011 to 29% in 2014. On the other hand, 44% of the population had to skip a meal because of a lack of money for food in 2014 compared to 29% in 2011. There has also been an increase in those unable to attend school due to a lack of fees from 25% in 2011 to 36% in 2014. The study shows that 65% of the adult population earn $100 or less per month.
Level of financial inclusion in Zimbabwe is now high
According to the results of the survey, financial inclusion in Zimbabwe has increased from 60% in 2011 to 77% in 2014. Mobile money has been the major driver of financial inclusion. Banks are the main drivers of transactional and credit products although banking costs remain a barrier to banking. Banking infrastructure is inaccessible to those in rural areas where 70% of the population live. As expected, financial exclusion is relatively higher in rural areas due to the limited access to banking infrastructure and limited employment opportunities.
The study revealed that the banked population has increased from 24% (1.45 million) in 2011 to 30% (2.08 million) in 2014. Banking in Zimbabwe is largely driven by the use of transactional products. A high percentage of the population (70%) is not banked with the majority of those indicating that they do not need a bank account (74%). Other reasons cited by individuals for not having a bank account are that they cannot afford to maintain a minimum balance required; bank charges are too high and many receive income in the form of cash and therefore have an insufficient balance for a bank account.
Only 30% of the population are banked – of those who do have a bank account, 67% regarded safety as the main reason for banking while 39% used bank accounts as a means to either deposit or receive money from an employer. Further, 20% of those who are banked believed that it was an easy way to obtain loans.
According to the survey, 53% of adult Zimbabweans do not save. Main reasons for not saving are that 69% of adults claimed to have insufficient money after livings expenses and 19% have no income in order to save. Of the 47% of adults who currently save, 35% save to cover living expenses while 21% do so for education and school fees. Only 19% save for non-medical emergencies.
Borrowing and credit
The study showed that 58% of adults do not borrow – of those who do not borrow, 39% fear debt while 35% are concerned about defaulting on credit. On the other hand, 42% of adults borrow mainly from family and friends. Of those who borrow, 40% do so for developmental reasons, 21% to cover living expenses, while 10% borrow to pay off another debt.
Insurance uptake low
According to the survey, 70% of adults do not have insurance with most of those (68%) claiming that insurance is not affordable and too expensive. Of those who do not have insurance, 30% believe that they do not need it while 10% do not know how insurance works.
Only 30% of the population have insurance – here the main driver for insurance is funeral cover/insurance (77%) and medical aid (30%). Further to this, burial society membership (76%) seems to be a popular form of informal insurance amongst those who do have insurance.
Remittances mainly through formal channel
The study revealed a major shift in the means of remitting, with people who formerly used informal mechanisms of remitting (e.g. family and friends, bus or taxi drivers) now using mobile money remittance services. To this end, 58% of adults claimed to remit – of those who remit, 83% used other formal channels such as the bank, mobile money and cross-border channels like Mukuru, MoneyGram and Western Union amongst others. Of those who remitted, only 9% used a bank while 17% used informal mechanisms such as bus or taxi drivers.
According to the survey, although 91% (6.7 million) of the population know about mobile, only 45% (3.15 million) are registered and only 3% (90 000) use another person’s mobile account. Of those who are registered users (3.15 million), 80% use it to remit while 46% use it to transact in order to pay utility bills, buy airtime, etc. Only 5% of the adult population indicated that they do not have enough information about mobile money.
Overall the survey showed that there are improvements in financial inclusion in Zimbabwe largely driven by an enabling environment and innovative products such a mobile money services. There has been notable reduction in the number of uneducated adults by slightly over half compared to 2011. Despite these improvements, more hardships were experienced in 2014 compared to 2011 due to a lack of money in this regard. In 2014, 45% of the households had to skip a meal as opposed to 28% in 2011. With regard to education, 37% of households were unable to send their children to school in 2014 compared to 24% in 2011; and 38% of the household population had to go without medical treatment in 2014 compared to 20% in 2011. More Zimbabweans (47%) are likely to save than to borrow (42%) despite economic hardships and low levels of income. Saving and borrowing are mostly for the purposes of living expenses, education, school fees and emergencies. The study also revealed that 99% of adults do not invest in formal products such as securities and the lack of income (74%) and awareness (40%) contributed to barriers in the uptake of these products. The study also revealed that there is a need for consumer education and financial literacy which are real issues in Zimbabwe in order broaden (more adults included) and deepen (more adults with more than one financial product) financial inclusion.
FinScope was launched in 2002 by the FinMark Trust (www.finmark.org.za). Its purpose is to establish credible benchmarks on the use of, and access to financial services. It is designed to highlight opportunities for innovation in products and delivery. The FinScope survey is a comprehensive and national representative study on financial inclusion, looking at how people source their income and manage their financial lives. It has been implemented in 20 countries (12 in SADC, 5 non-SADC Africa and 3 in Asia).