Dr. Jesimen T. Chipika, Deputy Governor, Reserve Bank of Zimbabwe

26 February 2024

Regional Joint Learning Program on Developing and Implementing Financial Inclusion Policies and Regulations for Women-led MSMEs – Opening Remarks by Deputy Governor Dr. J. T. Chipika

A very good morning and a very warm welcome, to the beautiful Victoria Falls, one of the Seven Wonders of the World.

It is my honor and privilege to welcome you all to Zimbabwe, on behalf of the Reserve Bank of Zimbabwe. Indeed, we feel honoured to partner with the Alliance for Financial Inclusion (AFI) in convening the first Regional Joint Learning Program in Zimbabwe which is focusing on “Developing and Implementing Financial Policies and Regulations for Women-led MSMEs”, the first of its kind.  

I want to believe that the collaboration to host this important training program is a recognition of our efforts in promoting financial inclusion of micro, small and medium enterprises (MSMEs), and in particular, women-led MSMEs.

The Reserve Bank and other financial inclusion stakeholders, recognize the crucial role played by women and MSMEs in driving the national economic development agenda through wealth creation, employment creation, improved livelihoods, poverty alleviation and entrepreneurship development. Women also play a key role as producers, leaders, entrepreneurs, and ‘intra-house financial managers’ responsible for allocation of scarce resources and well-being of family members.

Ladies and Gentlemen, according to the Zimbabwe FinScope MSMEs Survey of 2022, the MSMEs contribute up to 60% to our GDP and employ approximately 3.3 million people in Zimbabwe.

Furthermore, it is worth noting that women-owned MSMEs account for more than 60% of the total MSMEs in Zimbabwe, making them a key driver in addressing the gender gap.

Notwithstanding the significant contributions noted above, MSME in Zimbabwe continue to face several challenges. One of the main challenges that has militated against increased usage of financial services in this sector is the high level of informality, with the result that most of these MSMEs have failed to benefit from policy initiatives targeted at the MSME sector.

Due to lack of funding emanating from inappropriate or inadequate collateral challenges, and lack of entrepreneurship skills, on the backdrop of high levels of financial illiteracy, the FinScope Surveys indicated that most of the women-led MSMEs tend to be in the start-up phase of MSME development (69%) and fail to proceed to the next level in terms of growth and development.  Let me assure you that you shall hear from the presenters during this JLP, the various initiatives being implemented to ameliorate the identified challenges.

Ladies and gentlemen, ensuring access to appropriate, affordable, and sustainable finance for MSMEs, is not only an effective strategy to ensuring large scale employment and economic participation of the underserved and marginalized groups, but it is one of the most effective ways of working towards the achievement of the 2030 Sustainable Development Goals (SDGs).

Given the importance of MSMEs, and their contribution to wealth creation, employment, improved livelihoods, gender-equality and overall economic vibrance, it is SMART Economics to facilitate development of robust, well-resourced MSMEs that are better placed to contribute more meaningfully to the national development agenda.

As a country, we identified both women and MSMEs, as important target groups for financial inclusion initiatives both during the implementation of the first phase of the National Financial Inclusion Strategy (NFIS I -2016-2020) as well as implementation of the second phase of the National Financial Inclusion Strategy (NFIS II -2022-2026).

Zimbabwe has made commitments to the 2011 Maya Declaration on women financial inclusion and the 2016 Denarau Action Plan, to increase access to financial services by women and to close the financial inclusion gender gap.

We continue to review our commitments annually and set new national targets for women financial inclusion. We have indeed noted significant progress in the financial inclusion of the marginalized and underserved as we pursue the commitments made under the Maya Declaration as evidenced by the results of the FinScope Consumer and MSME surveys of 2022.

Ladies and gentlemen, the Central Bank, as the champion tasked with coordination and implementation of the National Financial Inclusion Strategy, noted the need for understanding the women, and their MSMEs, to effectively identify the gaps, and challenges, as well as come up with effective evidence-based initiatives to deal with the gaps and challenges identified. In this regard, in 2022, two surveys were commissioned, the FinScope Consumer and MSMEs surveys. The surveys identified a number of challenges experienced by women and women-led MSMEs in effectively accessing financial services including; low income levels, low levels of financial literacy, lack of requisite or adequate collateral, inadequate consumer protection laws, poor or no working shelter, and some social oriented challenges such as inadequate time due to multi-tasking.  Initiatives under the National Financial Inclusion Strategy II seek to address these challenges and facilitate increased uptake and usage of financial services by women and women led MSMEs.

As a country, Zimbabwe has identified financial inclusion of women and women-led MSMEs as one of the key policy priorities and continue to benchmark with international best practices on women and MSME financing to ensure MSMEs continue to play a significant role in the economy. Zimbabwe is a member of the AFI Gender Inclusive Finance Committee, and this has enabled Zimbabwe not only to contribute to international best practice with respect to women financial inclusion, but also to adopt the same international best practice, which I must say, have really worked for us very well.

Ladies and gentlemen, I am pleased to advise that to date, significant progress has been made with respect to financial inclusion of women and MSMEs as evidenced by the results of the 2022 FinScope MSME and Consumer Surveys which indicated that women financial inclusion increased from 68% in 2014 to 83%, while MSMEs inclusion improved from 18% in 2012 to 95% in 2022. The surveys indicated an overall access for the population of 83% up from 69% in 2014.

In this regard, financial inclusion for us is not just a moral imperative but remains a key enabler to sustainable and inclusive economic development, contributing significantly to improved & sustainable livelihoods, wealth, and employment creation.

I am pleased to advise that to-date notable achievements have been made, which bear testimony to the enriching collaboration among all the financial inclusion stakeholders. I will take you through the major initiatives that we have implemented under the National Financial Inclusion Strategy, in summary. These will be explained in more detail in the presentations during the workshop.

Our National Financial Inclusion Strategy II is anchored on four pillars, namely: Financial Innovation; Consumer Protection and Financial Capability; Microfinancing, MSME & Entrepreneurship Development; and Devolution. We consider MSME & Entrepreneurship Development to be key if we must attain our desired levels of inclusivity.

I will briefly highlight the initiatives that we have taken and the achievements to date, bearing in mind that the financial inclusion journey continues even after registering significant success stories.

At the inception of the first phase of the National Financial Inclusion Strategy, and in order to create confidence to lend to the underserved and marginalized groups, the Central Bank availed seed finance in the form of Empowerment facilities to banks and microfinance institutions for on-lending to the underserved and marginalized groups. Now these banks and microfinance institutions are using own funds to lend to the same segments, after realizing that it was an untapped market with great business potential.

One of the main impediments to accessing credit by underserved segments such as women, and MSMEs, as highlighted in the FinScope surveys, is inadequate or lack of requisite collateral.  As a solution to this challenge, the Central Bank, in November 2022, launched the Collateral Registry System which to date has proved to be a “game changer” in facilitating access to credit for the marginalized, particularly the women and their MSMEs, who normally would be considered risky because of lack of collateral.

As at 31 December 2023, the Collateral Registry System had 359 Active registered security interests by women with a corresponding loan amount of ZW$248.81 billion, against a background in which household goods, the majority of which are owned by women, were the most collateral pledged in December 2023.

Presentations that are going to be done during this week will provide details of how the market has actually adopted the use of the collateral registry and have made finance accessible to the women and women-led MSMEs, among others.

To complement the collateral registry and for credit risk information-sharing purposes, and in line with the National Financial Inclusion Strategy, the Credit Guarantee Scheme was re-introduced in 2018 through the Export Credit Guarantee Company of Zimbabwe (ECGC). The risk sharing arrangements are that the financial service provider/lender retains 25% of risk exposure while ECGC guarantees the remaining 75% of the risk exposure.

The main objective of the Credit Guarantee Scheme is to facilitate productive lending to small businesses to stimulate economic growth and development. Women and women-led MSMEs have benefitted from the use of the Credit-Guarantee Scheme.

 The Reserve Bank, in January 2017, successfully deployed the Credit Registry System aimed at enhancing the credit referencing environment in Zimbabwe and improve access to credit.

The Credit Registry helped in resolving irresponsible borrowing in the financial sector as reflected by the NPL ratio of 2.09% as at 31 December 2023. The Registry continues to promote responsible lending practices, and reduce over-indebtedness and credit costs, as credit service providers are now able to better understand their customers using verifiable credit data.

The Zimbabwe Women’s Microfinance Bank Limited, commonly known as the Women’s Bank, and EmpowerBank, were registered with a specific mandate to provide access to finance to women and women-led MSMEs, as well as young people, the majority of whom are women. To date these institutions have made significant inroads in reaching out to women and women-led MSMEs.

Further, all banks and Deposit-taking microfinance institutions were directed to set up Women’s desks and MSMEs desks to provide assistance to women and MSMEs requiring financial services from banks and microfinance banks.

ZWMB also contributes to the attainment of the Ministry of Women Affairs, Gender and Community, Small and Medium Enterprise Development vision of having “Socially and economically empowered women and resilient communities enjoying gender equality in an SME driven economy by 2030.”

The Central Bank introduced the SME Auction in 2022 with the view to ensure access to foreign currency for MSMEs, the majority of whom are women. This SME Auction was underpinned by lower due diligence to ensure that women are not disadvantaged since in most cases women have challenges in accessing funds requiring security. Since the inception of the SMEs auction up to December 2023 at total of US$217.6 million was accessed by SMEs, the majority who are women owned or managed.

The FinScope surveys indicated that savings have generally been on a downward trend from about 47% in 2014 to 36% in 2022, largely due to low disposable incomes and few investment alternatives, particularly for the marginalized groups.

The Central Bank introduced gold coins as an alternative stable investment product for value preservation and to inculcate a savings culture among the marginalized and underserved groups. The gold coins are sold in denominations  of 1/10 of an ounce,  ¼ of an ounce, ½ of an ounce and 1 ounce

As a complement to the sale of physical gold coins, the Central Bank also introduced electronic-based Gold-Backed Digital Tokens (ZiG) to expand the value-preserving instruments available to the marginalized segments of the country and enhance the divisibility of the investment instruments. Reflecting our focus on engendering inclusivity, the ZIGs are issued in milligrams (at US$0.06 per milligram), which is one thousandth of a gram to allow targeted groups to adopt them as an alternative store of value. To date, a total of 719.8 million milligrams (equivalent to 719.78kgs of gold) have been purchased.

The ZiG is fully backed by physical gold held by the Bank and its value is at par with the value of the physical Mosi-oa-Tunya gold coin and remains informed by the international gold price. In addition, the ZiG has now been transformed to be able to facilitate transactions in the economy, complementing the domestic currency. The ZiG is being purchased by both individuals and corporates.

Cognisant of the importance of mobile network operators (MNOs) in facilitating financial inclusion in the digital space, the Central Bank introduced bank and mobile money interoperability in 2020 through statutory instrument S.I 180/2020 Accelerated Instant Payments. MNOs have been seen to have a growing impact in this space while new technologies, especially those driving digital finance, provide immense opportunities for connecting businesses across the world.

The Finscope surveys showed that the main drivers of the formally included MSMEs are banking (42%), and mobile money products and services (75%). The use of technology by MSMEs is mostly mobile phone based in terms of payments and marketing. In this regard, there is scope to develop digital products and services that the MSMEs can use to upscale access and usage of financial services.

The Central Bank commenced licensing of Bureaux de Changes in February 2019 to add to the existing Money-transfer Agencies. To date there are 122 Bureau de Changes with 3,489 branches across the entire country. A total of US$22.5 million was accessed by the beneficiaries from the Bureaux de Changes, the majority of whom are the women and their MSMEs.

The Central Bank, in collaboration with other financial stakeholders is embarking on extensive financial literacy outreach programs to raise awareness on financial services, banking, investments, insurance and pensions, among other topics in a bid to raise the financial literacy levels and financial capability of consumers of financial services and products.

Ladies and gentlemen, there are many other initiatives by the multiplicity of financial inclusion stakeholders, too numerous to mention.

In conclusion, ladies and gentlemen, various speakers and presenters in this JLP are going to unpack Zimbabwe’s rich knowledge and experiences that will enhance your understanding as you seek to develop and implement Financial Policies and Regulations for Women-led MSMEs in your respective countries.  

Allow me, at this juncture, to thank Alliance for Financial Inclusion for choosing Zimbabwe to host this very important training program for our entire region.

Let me also take this time to express my gratitude to our speakers, for accepting our invitation and making room in your busy work schedules to come and share your experiences with our participants. Your unwavering support is well appreciated.

To you our dear participants, thank you for coming all the way from your different countries to take part in this training program. Do not leave without enjoying the warmth of our country as you experience the Victoria Falls – one of the Seven Wonders of the World!

I also thank both the Reserve Bank of Zimbabwe and AFI, for the roles they have played in bringing you all together and making this JLP a reality.        

I wish you fruitful deliberations and concrete take-outs in this JLP, as we push for inclusivity and sustainability of women-led MSMEs in our respective countries. Thank you

© Alliance for Financial Inclusion 2009-2024