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Financial Inclusion in Zambia and the role of the ADFP

On an ordinary day, Lusaka, Zambia’s capital city, is laden with agents on almost every corner of popular shopping malls, streets and communities. These agents contribute to the din in the city and offer various digital financial services to passersby and loyal returning clients. The agents are usually ready to offer money transfers, cash in cash out services, bill payments, to mention but a few options.

The agents (Bank led or Mobile Money Operator led) provides an avenue for financial inclusion in the Zambian landscape. Having led an aggressive roll out of agency banking at a named Bank, I cannot help but discern that being an agent has become a popular vocation for many.

Promoting the proliferation of mobile money agents is one way the Digital Financial Services ecosystem can grow and capture the financially excluded Zambians. The formal and informal financial sector account for 59% of Zambians who are financially included as at November 2017. Here starts the fight for, what I would call the “leave no one behind,” in the financial inclusion Agenda. The National Financial Inclusion Strategy highlights four drivers key in achieving increase in the financial inclusion numbers to 80% by 2022[1]:

To achieve financial inclusion, an ecosystem wide effort is required.

The Government of Zambia as well as DFS providers have made great strides at coming up with strategies at institutional levels and at government policy level. I have observed that these efforts are a somewhat institutional and not collective. This observation made together with other like-minded DFS experts led to the birth of a professional association aimed at bridging the gap between DFS providers and Consumers in a unique way.

The Alumni and Digital Frontiers Institute (DFI) Community of Practice (COP) members formed the ADFP in Zambia in 2018. The key objectives are offering technical advice in building the DFS ecosystem, payment systems sensitization, support and promoting innovation, advocacy for financial inclusion, promoting co-opetition and interoperability, advocating sustainability and enabling financial markets to work for the poor by continuously sharing ideas among the practitioners and members of the association. This knowledge sharing extends to non-practitioners who may have interest in DFS and are keen to learn.

Zambia has had a lack of complete interoperability owing to a lack of a unified switch connecting all service providers. The country has been at implementation stage for years now and the solution has been largely bilateral integrations between financial service providers. In light of the current landscape, what does this mean for financial inclusion in Zambia?

Financial service providers and their agents put financial inclusion within reach for a cross-section of people, thereby also serving low-income communities[2]. In all this, FSPs and their agents are a good investment for DFS providers.

However, it is in my considered view that the bilateral agreements between service providers have caused many disparate levels and quality of service for the customers with many having to open various wallets in order to receive or send cash. Despite the fact that there has been an increase in Push and Pull Transactions between MNOs and Banks[3] the number of integrations still needs to scale up. The DFS ecosystem also has had limited use cases for merchant payments rendering the service difficult to roll out in rural areas of the country, which has led to many dormant or inactive wallets. This is supported by the fact that the number of unique active customers by product type was lowest for Merchant payments in both 2016 and 2017[4]. The ADFP is poised to increase awareness for both service providers and the consumers.

For the service providers, ADFP plans to continue to engage in discussions around Human Centered Designs for product development and rollouts. Further, having a rich background of professionals, discussions on hurdles faced by service providers may become easier in order to help others with similar strategies falling in the same trap by sharing lessons learnt. Of course due care should be taken to avoid undue disclosures. The ADFP plans to further hold Digital Intelligence sessions with members and discussions on best practice among providers.

For the consumer, focusing on literacy and de-jargonizing the DFS space will prove helpful. In addition, disclosing what to look out for in order to safeguard consumers from frauds and ensure safety in transactions will be cardinal[5]. This will include sharing common cybersecurity themes and safeguards to protect wallets and transactions.

Finally, ADFP will actively engage industry players in pursuing its agenda for the good of all. This is especially so because of the neutrality that the association members enjoy. This engagement will also be important to avoid duplication of efforts by other enablers. Therefore, ADFP sees itself as playing a key role in the Enabler space i.e. Public and Private Sector Commitment/Coordination.

[1] Zambia National Financial Inclusion Strategy 2017 -2022

[2] UNCDF State of the Industry 2017

[3] UNCDF State of the Industry 2017

[4] UNCDF State of the Industry 2017

[5] ITU-T Focus Group Digital Financial Service 2016

Douglas Zulu
Douglas Zulu is a seasoned banker, certified financial modeler and Digital Financial Services expert with over 10 years banking experience. He believes that digitization of financial transactions is one way to achieve financial inclusion. Through experience, he has created financial models that can be used by MNOs, Insurance Companies, Auditing Firms, SME and Banks to predict behaviors and forecast trends for strategic decision making that support growth. Douglas holds a first Degree in Mathematics an MBA in Finance. Other certifications include Chartered, Certificate in Financial Modelling, and Advanced Professional Diploma in Banking and Financial Services, and Certified Digital Finance Practitioner (CDFP).

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