of the Informal Sector in Masvingo, Zimbabwe
FEATURED PAPER
By Dauglas Halimani, Tariro Mavaza, Farai Don Dzapasi
Department of Banking and Finance
Great Zimbabwe University
Masvingo, Zimbabwe
ABSTRACT
The purpose of the research was to explore the level of Financial Inclusion among the informal sector section of the population of Masvingo and the reasons behind An exploratory research design was used to achieve the envisaged aims of the study. Overall, the results showed that the majority of the informal sector in Masvingo remains largely financially excluded. The main reasons they cited was low income to save as a result of harsh economic environment that exist in the country and lack of confidence on the formal banking system. The banks on their part cited high cost of doing business for them to effectively mobilise financial inclusion. The implications of the study are that the Government of Zimbabwe should vigorously promote economic stability and restore public confidence in the banking sector before Financial Inclusion can be finally achieved
Keywords: Financial Inclusion Mobile Banking Financial Literacy
INTRODUCTION
From numerous studies previously carried out, it has been established that economic growth and development is difficult to achieve if a large portion of the population is wallowing in poverty. According to Kunt and Klapper (2012), well – functioning financial systems serve a vital purpose, offering savings, payment to people with a range of needs and more inclusive financial systems – allowing broad access to appropriate financial services are likely to benefit poor and other disadvantaged groups. Financial Inclusion has had many definitions from different scholars. Thorat (2006) offers that financial inclusion implies providing affordable financial services such as access to payments and remittances facilities, savings, loans and insurance services by the formal financial systems to those who tend to be marginalised. Empirical evidence confirms that countries with a large section of their population that is not financially included tend to have higher poverty ratios and inequality. The results of such imbalances include high crime rates and a potential source of social unrest. (Sharit 2013). Financial Inclusion will raise capacity for investment and develop savings and entrepreneurial abilities within the population which often lead to higher incomes and consequently better lives (Chakrabaty 2009)
Overview of Banking in Zimbabwe
Presently, the financial sector comprises the Reserve Bank of Zimbabwe (RBZ) at the apex, discount houses, commercial banks, merchant banks, finance houses, building societies, the People’s Own Savings Bank (POSB), insurance companies, pension funds, venture capital companies, asset management companies, developmental financial institutions, the Zimbabwe Stock Exchange, microfinance institutions and money transfer agencies (that intermediate remittances). As at the end of 2018 there were 28 banking institutions (down from 32 as at 31December 2003), 17 asset management companies and 75 operating microfinance institutions (see Table 1). What is clear from Table 1 is that the instruments of financial inclusion, namely microfinance institutions, have suffered the brunt of macroeconomic instability.
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How to cite this paper: Mavaza, T.; Halimani, D.; Dzapasi, F. (2020). An Insight into Financial Inclusion of the Informal Sector in Masvingo, Zimbabwe; PM World Journal, Vol. IX, Issue II, February. Available online at https://pmworldlibrary.net/wp-content/uploads/2020/01/pmwj90-Feb2020-Mavaza-Halimani-Dzapasi-financial-inclusion-of-informal-sector-in-zimbabwe.pdf
About the Authors
Tariro Mavaza
Great Zimbabwe University
Masvingo, Zimbabwe
Tariro Mavaza is a Lecturer in the Munhumutapa School of Commerce, Department of Banking and Finance, the Great Zimbabwe University. He previously worked for Zimbabwe Revenue Authority as a Revenue Official. His areas of research are: Financial markets, Revenue Collection Systems I, Corporate Governance, Quality Management Systems and Project Management. He has published three research papers in International and Regional Journals on Total Quality Management and Corporate governance. Email address: tmavaza@gzu.ac.zw
Dauglas Halimani
Great Zimbabwe University
Masvingo, Zimbabwe
Dauglas Halimani is 36 years old and a lecturer at Great Zimbabwe University since 2014. He holds a master’s degree in Banking and Financial Services from National University of Science and Technology as well as Bachelor of Commerce Honours in Finance from Great Zimbabwe University. He is a final year Bachelor of Laws student with the University of South Africa. His interests span the areas of commerce and law. He can be contacted dhalimani@gzu.ac.zw
Farai Dzapasi
Great Zimbabwe University
Masvingo, Zimbabwe
Farai Dzapasi is a lecturer in the Department of Banking and Finance at the Great Zimbabwe University. He holds a Bachelor of Commerce Honours in Finance and Master of Commerce in Finance from Great Zimbabwe University.
