Fintech Driving Financial Inclusion in Zambia

Author: Mark Chirwa – Assistant Research & Publications Officer – PAYZ

Fintech Driving Financial Inclusion in Zambia

Around the world especially in emerging economies, the term Fintech has become a buzzword in the financial sector. This article will try to shed more light on how the fintech industry has been spearheading the financial inclusion agenda over the past few years in Zambia.

Financial inclusion has been defined as a state in which all people have access to a full suite of quality financial services such as savings, borrowing, account ownership, insurance, and payments that are provided at affordable prices, in a convenient manner and with dignity for the clients (Joshi, 2012)

Financial inclusion though, is about a lot more than just having a bank account, it’s about being able to send and receive money easily, quickly, and cheaply. This is important for micro-merchants around the country that are trying to earn a livelihood to support their families, staff, and communities. When people have more choices and opportunities to access financial services, it enables them to improve their lives. Financial inclusion is a key part of the government’s ambition to build a sustainable, inclusive, and robust economy that works for everyone.

In driving this agenda, Fintechs have become an integral part of the financial inclusion movement in Zambia, paving the way for new opportunities to provide people with accessible, affordable, and innovative products or services such as mobile money, digital payment platforms which allows people to receive remittances, pay for electricity/school fees/bills over long distances and other digital services. But it is not accurate to say that having a mobile wallet amounts to financial inclusion.  One of the United Nations Sustainable Development Goals, goal 8 hinges on promoting sustained, inclusive, and sustainable economic growth. One of the targets of this goal is to expand access to banking, insurance, and financial services for all, exactly what Fintechs are doing. Although relatively small, the Fintech industry in Zambia has the potential to help people who have been traditionally underserved by the banking system, such as women, low-income earners, refugees, people with disabilities or learning difficulties, and young or older adults. It has the power to help people build a better life and improve their future. Hence Fintech’s potential remains much greater than what has currently been achieved.

In 2019 for example, Money transfers and digital payments boasted an adoption rate of 75% globally among fintech products compared to Borrowing which stood at 27% and was the least adopted product as insurance had a 29% adoption rate. (EY 2020)

In Zambia, mobile money has proven to be a huge contributor to financial inclusion which in turn is beneficial to socio-economic development. Between 2015 and 2020 mobile money use by the adult population rose from 14% to 58.5% in 2020 (Finscope Study 2020). An indication that mobile money has been increasing employment opportunities for the people of Zambia. For example, in a study conducted by (Lewis-Landy Gakpa 2023) on the relationship between financial inclusion and entrepreneurship, results show that there is a positive correlation between the two variables in the case of Zambia.

 Mobile money can also drive poverty alleviation. When more people get access to mobile money services, they will save more, invest more and generally improve their financial behavior which in turn will drive consumption and lift people out of poverty.

According to a report released by the McKinsey Global Institute, it was estimated that digital finance such as mobile money would add $3.7trn to the GDP of emerging economies in the years leading up to 2025, presenting an opportunity for expansion in serving the underserved population and the development of innovative financial products for the Fintech players. 

In its latest report on Inclusive Digital Economy 2022 in Zambia the Ministry of Technology and Science has noted that Financial and Digital literacy is trailing behind basic skills which stood at 30% and only 20% for Financial and Digital Literacy. One primary goal of the Ministry of Finance is increasing financial literacy in the country, as embodied in the National Strategy on Financial Education with an overall objective of seeing that the Zambian population “has improved knowledge, understanding, skills, motivation and confidence to help them secure positive financial outcomes.” This indicates that more must be done going forward to increase financial literacy levels such as investing some money in financial literacy activities, Consumer awareness programs on the use of Digital Financial platforms, and protection. Fintechs can also empower organizations who work with low-income families and households to offer a viable alternative to high-interest, pay-day loans and bank charges to continue driving the Financial Inclusion agenda.

Financial Inclusion has a multiplier effect in that not only does it add to financial stability but contributes to a country’s development also. Hence going forward there is a need to continue boosting Government’s efforts and capacity to harness Fintech in the country and foster collaborations among different stakeholders in the ecosystem to take the industry to another level. 



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