Solving Liquidity Challenges for Banking Agents in Zambia


Agency banking has transformed access to financial services for people living in remote or underserved areas in the developing world. Agents are local merchants and shopkeepers that provide basic banking services to clients using point-of-sales machines or mobile devices equipped with biometric (fingerprint) identification that connect to bank accounts using cellular networks. This brings banking services closer to where people live and work, especially in areas where brick-and-mortar bank branches are few and far between.

Despite the convenience it affords clients, agency banking faces a challenge. Across Africa, many agents can only perform a limited number of transactions before they run out of money and are forced to turn clients away. In Zambia, for instance, UNCDF estimates that up to 20 customers on average are denied service daily in rural areas due to this reason. Such customers may become frustrated and discouraged from using the agents, resulting in less access for customers, lower income for agents, and less outreach for the financial service provider—all in all impeding progress toward financial inclusion.

A pilot initiative between FINCA Zambia and UNCDF could point a way forward for addressing the liquidity challenges of agency banking. In collaboration with mobile money provider MTN, they have developed a product that looks at agent transaction history as the basis for granting a revolving line of credit. Agents who qualify for the product, called FINCA Agent Cash, do not need to provide collateral. That makes it a highly inclusive product, given that most agents in remote areas are micro-entrepreneurs who are unable to provide the kinds of guarantees that traditional banks require.

Godwin Malanda is an agent in Chongwe District who is benefiting from the product.

FINCA Agent Cash has really helped me to help the community here in Chongwe. I feel that it is a godsend, especially for us in the mobile money business. My prayer has been answered because all that you need now is to have a mobile line and you pull the money and then just push it back and it ends there.

FINCA Zambia and UNCDF continue to monitor the product’s performance and impact, but testimonies from agents like Godwin confirm that FINCA Agent Cash is working effectively as designed. The product is available to any agent network in Zambia, or any financial service provider willing to share their agency network with FINCA Zambia. Moreover, it provides a model that could be replicated in other countries dealing with similar agent liquidity challenges.