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�INTRODUCTION - Zimbabwe’s Fact Sheet

�SDGs & THE FINANCIAL SYSTEM

�RENEWED Broader ROLE OF CENTRAL BANKS

� TRADITIONAL ROLES OF CENTRAL BANKS

� DEVELOPMENTAL CENTRAL BANK MANDATES

� GREENING OF THE FINANCIAL SYSTEM

� OPPORTUNITIES FOR THE FINANCIAL SECTOR

� CHALLENGES ARISING FROM A WIDER MANDATE

�ZIMBABWE’S NATIONAL FINANCIAL INCLUSION STRATEGY, 2016-2020

�CONCLUSION & WAY FORWARD

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� Zimbabwe, is a landlocked country located in Southern Africa, between the Zambezi and Limpopo rivers, bordered by South Africa, Botswana, Zambia and Mozambique.

� Capital City: Harare.

� Land Area: 386,850 square km.

� Official Language(s): English, Shona, & Ndebele (16 Official Languages).

� Population: 14.5 Million (Estimate 2016); 99.7% are Black Africans.

� Currency: US$, since 2009, within a Multi-Currency Basket.

� GDP US$: $14 Billion, low income country.

� GDP per capita (US$): 1 050.4

� Annual Inflation: 2.71% May, 2018.

� More than 90% of Agricultural land now in the hands of indigenous blacks following a highly controversial land reform program since 2000.

� Mineral rich country with around 60 minerals known, but around 15 commercially mined.

� One President (R.G Mugabe) since independence in 1980, 37 years, until Nov 2017 when a peaceful military transition ushered in a new era under the current President E.D. Munangagwa.

� Zimbabwe was under sanctions for two decades, since 2001.

� But now “Zimbabwe is Open for Business”, under a serious re-engagement program.

� Houses the majestic Victorial Falls, one of the 7 wonders of the world!5

SDGs & THE FINANCIAL SYSTEM

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� SDGs recognise domestic financial resources as the key enabler for sustainableeconomic development.

� The financial system fosters economic growth & development, efficient resourceallocation, the protection of the environment & social responsibility.

� SDGs serve as a global compass which the financial community of banks, insurers andinvestors can use to guide their core business towards achieving economic, social andenvironmental sustainability.

� Within this context, (of LEAVING NOONE BEHIND)!, Central banks have embracedfinancial inclusion to enhance sustainable development.

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RENEWED BROADER ROLE OF CENTRAL

BANKS

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TRADITIONAL ROLES OF CENTRAL BANKS

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�The orthodox approach since the 1980s has beenseverely undermined by the global financial crisisof 2007/8.

�In the aftermath of the crisis, many central bankshave adopted unconventional policies.

�Central banks and financial regulators havebecome active in promoting economicdevelopment and structural transformation,financial inclusion, aligning the financial systemwith sustainable development, and greeningfinancial systems, among others.

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� Central Banks developmental focus played important roles in rebuilding economies following the Great Depression and the Second World War in Japan, Brazil & Chile; India, Nigeria.

� Following the more recent Global Financial Crisis, Central Banks again played a key developmental focus in the USA, several EU countries, Kenya, Pakistan, Amernia, Bangladesh etc.

� Since 2011, Central Banks have signed the Maya Declaration on financial inclusion targets.

� Central Banks participating in several networks e.g AFI & AFRACA, among others.

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� Initiatives by central banks and financial regulators.

Central Bank of Bangladesh

• In 2011, introduced a comprehensive Green Banking Framework.

China Banking Regulatory

Commission

• In 2012, issued Green Credit Guidelines, for the purpose ofencouraging banking institutions focus on green credit.

Chinese Central Bank

• In 2014, launched a Green Finance Task Force.

Mongolia

• In 2014, Central Bank Launched the Mongolian SustainableFinance Principles and Sector Guidelines.

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�Raise capital for, water and sanitation infrastructure,through public private partnership.

�Underwrite renewable energy developments such aswind farms and solar power projects - inclusive low-carbon economy.

�Expand finance for ‘the missing middle’ i.e. MSMEs

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� Increase financing for sustainable agriculture & extendinsurance protection for smallholder farmers.

� Advance financial inclusion.

�A wider central bank mandate may not only have benefits but it may also

raise some challenges.

If there are too many objectives and too few policy instruments at their disposal.

Political pressure to pursue developmental policies at the expense of stability.

Tradeoffs may arise in achieving developmental and stabilisation objectives.

Too much power in the institution.

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ZIMBABWE’S NATIONAL FINANCIAL INCLUSION STRATEGY, 2016-2020

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� The Economy is on the Recovery having grown by 3.7% per annum in 2017 and an estimated 4.5% in 2018!

� With our GDP at around $14 billion & GDP per capita of $ 1050, Zimbabwe is still a low income country!

� We aim to be middle income by 2030, with a GDP per capita of $ 3500.

� Zimbabwe has one of the largest informal sectors at 60.6% of GDP ($7-8 billion), second to Bolivia with 62.3% of GDP, (IMF, 2018).

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� It is estimated that there are 3.5 million MSMEs, employing nearly 6 million people (half owners and half employees). (2012 MSME FinScope Survey).

� In Zimbabwe 85% of the MSMEs are micro/informal (FinScope, 2012).

� % of loans to MSMEs to Total loans from the banking sector in Zimbabwe is only 3.75% ($146.22 million), Dec 2017.

� Only 14% of MSMEs had bank accounts in 2012.

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� Loans to women accounted for less than 10% of total banking sector loans and advances at the end of 2017.

� Loans to the youth are around 2% of total loans.

� 70% of the adult population is not banked and 70% have no insurance of any form.

� 99% of the adult population do participate in capital markets (Zimbabwe Stock Exchange).

� Yet our population is very enterprising & hard working! So where is the missing link?

� Access to affordable formal financial services for the majority to support their economic initiatives (projects & businesses)!

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THE CONCEPT OF ADDRESSING MARGINALISATION

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$451.51 Million

Tertiary Educational Loan $50m

Business Linkage $10 m

Horticulture Promotion $10m

Women Empowerment $15m

Soya Beans Facility $21.51m

Microfinance Revolving Facility

$10m

ExportFinance $70m

SME/Cross Boarder $15 m

People with Disabilities $5 m

Tourism Facility $15m

Youth Empowerment Fund $10 m

FPR Gold Facility $150m

Tobacco Facility $70m

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Youth

Marginalised

Women

Rural Population

Disabled

Financing

Entrepreneurship Training

Record Keeping Financial Literacy

CollateralImmovable Movable

SMEs

Digital InnovationFinTechs etc

Insurance

Zimbabwe Financial Inclusion Challenges and Possible Solutions

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FINANCIAL SERVICES SECTOR

Insurance and Pensions

(2,340 players)

Development Financial

Institutions (2)

Banking Institutions

(19)

Capital Markets (2 Exchanges),

(17 Stock Brokers)

Microfinance Institutions (185 Credit Only and 5

Deposit Taking)

Mobile Network Operators (MNOs)

(3)

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9 THEMATIC GROUPS

i. Women;ii. MSMEs;iii. Youth;iv. Rural and Agriculture;v. Digital Finance;vi. Financial Literacy & Consumer Protection;vii. Microfinance;viii.Insurance, Pensions & Capital Markets; andix. People with Disabilities

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� Banking institutions with Women’s Desks (11) and SMEs Units (13) out of the 19 banks in the country.

� 183 MFIs, 6 of which are Deposit Taking or Micro-Banks.

� The Credit Registry commenced operations in January 2017.

� Collateral Registry established, will start operations soon, facilitating the use of even movable property as collateral.

� Re-established the Credit Guarantee Scheme.

� Zimbabwe Women Microfinance Bank.

� EmpowerBank (Youth Bank). 24

� As at 4 May 2018 a total of $201.06 million, representing 44.31%, had been disbursed to

enhance the participation of marginalised segments in economic activities.

� The facilities have had significant impact in supporting production for both local

consumption (import substitution) & export generation.

� The funded activities have been instrumental in developing various value chains

particularly in agriculture, mining, manufacturing & tourism.

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Pepukai Madzimai (with a membership of about 1000) now planning to export their products!

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� Empowerment Projects funded through Homelink Finance (RBZ subsidiary)...

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• Successful community value chain financing scheme supported by private sector players in the citrus industry!

Some of the members of the Shashe IrrigationScheme. (total membership is 186, each with 50orange trees).

Shashe irrigation Scheme receives support fromcommercial farmer (Andrew Nott - extreme left)as well as other partners.

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• Successful community value chain financing scheme supported by private sector players…

Banana Plantation in Middle Sabi Michigan Beans Plantation in Middle Sabi

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Global Money Week Celebrations, 12-16 March, 2018, 165 000 students plus 6 million Radio listeners.

Hosted by the Central Bank Hosted by one of the Commercial Banks

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� Reshaping the medical aid landscape - introducing low cost - high benefit plan…

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� Gold production in Zimbabwe has significantly improved following the integration of the smallscale mining sector.

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GOLD DELIVERIES TO FIDELITY PRINTERS (KGs) : 2015 TO MAY 2018

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0.000

500.000

1000.000

1500.000

2000.000

2500.000

GOLD DELIVERIES TO FPR BY SECTOR: 2015 TO MAY 2018

Small Scale (kgs) Large Scale (Kgs)

Indicator Dec 2016 Dec 2017 Annual %

Value of loans to SMEs $131.69 m $146.22 m 11.03%

Percentage of loans to SMEs over totalloans

3.57% 3.75% 2.55 basis points

Number of SMEs with bank accounts 71,730 76,524 6.68%

Number of Women with Bank Accounts 769,883 935,994 21.58%

Value of Loans to Women $277.30 m $310.78 m 12.07%

Number of Loans to Youth 38,400 61,529 60.23%

Value of Loans to Youth $58.41 m $138.93 m 137.85%

Total number of Bank Accounts 1.49 m 3.07 m 106.04%

Number of Low Cost Accounts 1.20 m 2.00 m 66.67%

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PAYMENT SYSTEMS ACCESS POINTS

DESCRIPTION 2014 2015 2016 2017 March 2018 % Change from Dec 2017

ATMs 538 556 569 561 563 0.4%

POS 12,612 16,363 32,629 59,939 70,960 18.4%

Bank Agents 802 1,723 4,059 4,865 4,715 -3.1%

Mobile Banking Agents 25,618 38,745 40,590 47,838 48,812 2.0%

MPOS ** ** ** 6,063 6,114 0.8%

PAYMENT SYSTEMS ACCESS DEVICES

DESCRIPTION 2014 2015 2016 2017 March 2018 % Change from Dec 2017

Debit Cards 3,613,781 2,365,160 3,127,153 4,281,683 4,471,819 4%

Credit Cards 9,547 10,854 16,030 17,411 17,268 -1%

Prepaid Cards 28,881 30,125 43,288 63,987 68,180 7%

Active Mobile Phone Banking Subscribers

** ** 3,279,049 4,611,608 4,907,500 6%

Active Internet Computer/Phone Banking

78,548 108,662 168,339 277,674 286,222 3%

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PAYMENT STREAM 2016 % OF TOTAL 2017 % OF TOTAL

VALUES

RTGS 48,109,325,214.79 69.51 61,719,667,657.05 63.28

CHEQUE 113,083,273.59 0.16 69,437,643.79 0.07

POS 2,898,437,870.85 4.20 6,635,840,710.92 6.77

ATMs 2,283,533,146.98 3.32 427,973,605.99 0.44

CASH WITHDRAWALS 7,483,687,051.00 10.84 3,647,133,052.00 3.69

MOBILE 5,815,862,225.76 8.38 18,020,733,457.33 18.46

INTERNET 2,503,914,145.97 3.61 7,021,588,382.39 7.29

TOTAL 69,207,842,928.94 100 97,542,374,509.48 100

VOLUMES

RTGS 2,901,664 0.76 5,903,136 0.58

CHEQUE 347,735 0.09 320,341 0.03

POS 52,407,464 13.65 214,857,784 21.22

CASH 16,252,259 4.25 24,675,581 2.43

ATMs 12,332,547 3.20 8,098,497 0.79

MOBILE 298,586,190 77.78 754,742,123 74.52

INTERNET 1,110,366 0.27 4,248,650 0.43

TOTAL 383,938,226 100 1,012,846,112 10036

� Zimbabwe has a total of 436 registered SACCOs, mostly voluntary, plus many more unregistered!

� In 2017, Total Savings by the registered SACCOs was $14 million, whilst Total loans were $11 million.

� While SACCOs are popular among marginalized groups, and are good for Financial Inclusion – but one must have some source of $ first to be able to contribute!

� Formalisation/Registration is important, to reduce the high risk of loosing $.

� Kenya & Rwanda are best practice for SACCOs, in Africa.

◦ To date, the RBZ has reached out directly & indirectly to an estimated 100 000 people (mostly women & youth),through outreach meetings on Financial Inclusion.

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�Experiences show that the developmental role of central banks,particularly, in driving the inclusivity agenda, is key forsustainable economic growth and development.

�Enclave economies drive the poor majority to use theenvironment as the “Bank of Last Resort”!

�However, it is important to maintain the right balance, in allobjectives and actions, in order to minimise negativeconsequences.

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