Financial exclusion affects 54 percent of Zambia’s adult population. In 2017, Comic Relief and Jersey Overseas Aid (JOA) launched a joint program, Branching Out: Financial Inclusion at the Margins to increase financial inclusion in Rwanda, Zambia, and Sierra Leone.
Two years later, the organizations partnered with FINCA Zambia to expand its agent banking network from 75 agents to 800. The agent banking network consists of local merchants and shopkeepers that provide basic banking services in places where FINCA does not operate, with the goal of increasing financial inclusion in Zambia’s most rural areas.
FINCA Zambia, Comic Relief, and Jersey Overseas Aid are working together to provide more people with access to bank accounts, savings groups, insurance, and credit for low-income households, giving them realistic tools to plan their future, achieve long-term goals, and be prepared for unexpected situations.
A Recent Study Outlined Steps Being Taken to Ensure Financial Inclusion Does Not Decline
As Financial Inclusion Week (November 1 – 5) draws to a close, below are some of the findings from a new report commissioned by Comic Relief and Jersey Overseas Aid, Resilient and Inclusive Financial Services Delivery During COVID-19. The report examines the impact of the global pandemic and the important lessons learned.
When the COVID-19 pandemic struck Zambia, it wreaked havoc on those already financially excluded due to:
- Reduced face to face financial service delivery, which fell from 35 percent to 24 percent. Meaning that people who did not have internet access or technology were at a loss as financial service provider branches were forced to close, and many working in rural communities could not access the service due to lockdown restrictions.
- New travel restrictions. This created a challenge for many women who worked as cross-border traders. Many of these women were unable to adjust to the new technology-driven environment for conducting commercial transactions via e-commerce, such as placing online orders and sending electronic payments to overseas suppliers. And because of the travel limitations, farmers had restricted access to markets for their farm produce, which could not reach their typical urban markets.
- Amplifying existing challenges to financial inclusion such as geography, internet access, and technology, as well as a lack of digital and financial literacy.
COVID-19 posed a serious threat to those already marginalized, putting them at risk of being further financially excluded. It is these groups of women, youth, SMEs, and farmers who live in rural areas that FINCA, Comic Relief, and Jersey Overseas Aid are working to help become financially stable.
Additionally, the report identified the critical steps taken to protect the financial inclusion sector from economic decline during the pandemic. Here are some of them:
- Government bodies promoting the use of the agent banking network. This contributed to the significant increase in usage, from 42 percent to 47 percent in Zambia.
- Financial service providers placing more emphasis on mobile banking. Mobile banking increased from 26 percent to 36 percent in Zambia.
The findings interestingly show that COVID-19 has sped up financial inclusion in most of these countries, which in some ways has meant more people have been able to access services such as banking loans and saving accounts, as agents were able to deliver financial services in the community in line with social distancing guidelines. While the pandemic has accelerated the digitalization of financial services, the danger remains that many people will be financially excluded if education and tools are not provided to those who are most at risk, and the barriers to financial inclusion remain. These include:
- Living in rural areas
- Reduced access to digital technology
- Distrust in banks
- A lack of financial and digital literacy
FINCA is Promoting Prosperity in a Time of Uncertainty
FINCA is working tirelessly in Zambian communities to implement the Branching Out initiative, but more work is needed to make a significant difference in people’s lives. More than half of Zambia’s population was financially excluded prior to the pandemic, but by expanding the agent banking network in collaboration with Comic Relief and Jersey Overseas Aid, those who were previously financially excluded can now be reached and gain access to financial services, allowing them to build and plan for a prosperous future. As they continue their long fight against poverty, your continuing support for the women and men FINCA supports is more important than ever. Please consider donating today to help us continue to enhance the lives of our clients and their families.