NATIONAL FINANCIAL INCLUSION STRATEGY

1 REPUB L I C O F Z AM B I A. NATIONAL FINANCIAL INCLUSION STRATEGY . 2017 2022. 2017 Ministry of Finance Economic Management Department Chimanga Road Box 50062. Lusaka, ZAMBIA. Tel: +260-211-257-178. Website: Portal: REPUB L I C O F Z AM B I A. NATIONAL FINANCIAL INCLUSION STRATEGY . 2017 2022. F O R E W O RD. This NATIONAL FINANCIAL INCLUSION STRATEGY (NFIS) provides opportunities for better livelihoods. It pro- a roadmap to further accelerate our FINANCIAL INCLUSION vides a platform for low-income populations journey in Zambia by setting forth a series of specific, with the mechanisms to borrow, save and in- delineated, and sequenced actions for a wide range of vest, and make payments.

2 Further, it enables stakeholders. Enhanced FINANCIAL INCLUSION in various them to plan ahead and better manage their finances, countries has been shown to contribute to wealth cre- thereby facilitating consumption smoothing, and to pro- ation, economic growth, and sustainable development . tect their loved ones and belongings from unexpected Government recognised the need for a comprehen- disasters or crises. The overall objective, which is to sive NATIONAL FINANCIAL INCLUSION STRATEGY to accelerate provide a framework that will lead to the development progress toward inclusive, stable, and competitive fi- of a stable, resilient, competitive, and inclusive FINANCIAL nancial sector development in Zambia.

3 The STRATEGY was sector that contributes to economic growth and broad- developed to build on the successes of Zambia's first based wealth creation, and specific objectives sit within and second FINANCIAL Sector development Plans (FSDPs), a structure that integrates strategies for improving access which ran into two successive five-yeara cycles from 2004 and enhancing usage and quality to improve the stan- to 2009 and from 2010 to 2014. dard of living of all Zambians. Our vision is to achieve universal access and usage of The NFIS consolidates existing relevant strategies and a broad range of quality and affordable FINANCIAL services interventions into a single document and implementation that meet the needs of both individuals and enterprises.

4 Plan. With the launch of this NFIS, Zambia joins more To us this means that irrespective of social or economic than 30 countries that have or are developing NATIONAL status, gender, or level of education, we want to ensure FINANCIAL INCLUSION strategies. that every segment of Zambian society has access to ba- The Ministry would like to thank all our FINANCIAL inclu- sic FINANCIAL services. sion partners and various stakeholders for their invaluable Access to and usage of a broad range of quality and support and efforts to improve the livelihoods of our peo- affordable FINANCIAL products and services would open up ple through an inclusive FINANCIAL system.

5 Fredson K. Yamba SECRETARY TO THE TREASURY. NATIONAL FINANCIAL INCLUSION STRATEGY 2017 2022 iii AC K N O WLEDGEMENT. The NATIONAL FINANCIAL INCLUSION STRATEGY (NFIS) is an out- Exchange Commission, and the Pensions and come of an extensive collaborative consultative process. Insurance Authority), the Rural Finance Ex- The preparation of this STRATEGY involved significant re- pansion Programme, and the Competition flection and consultation with relevant stakeholders and and Consumer Protection Commission for the NATIONAL FINANCIAL INCLUSION Drafting Committee (NF- their active involvement in the development of the strat- SIDC).

6 The Ministry of Finance, therefore, acknowledges egy. The Ministry also acknowledges the invaluable sup- the contributions of all stakeholders whose input, involve- port and comments received from other public and ment, and participation have helped in the development private sector players, including research, academic, and of the STRATEGY . In particular, we would like to recognise civil society organisations and development partners the valuable contributions of the NFISDC in putting to- during the development of the STRATEGY . gether the STRATEGY and the World Bank Group through It is the Ministry's earnest expectation that with the the FINANCIAL INCLUSION Support Framework (FISF) in sup- launch of this NFIS, Zambia will be able to increase the porting Government efforts to develop the STRATEGY .

7 Level of FINANCIAL INCLUSION , which should in turn support Special appreciation is also extended to the FINANCIAL social economic development . sector regulators (the Bank of Zambia, the Securities and Mukuli Chikuba PERMANENT SECRETARY - EMF. NATIONAL FINANCIAL INCLUSION STRATEGY 2017 2022 v CONTENTS. Foreword.. iii Acknowledgement.. v Contents.. vii List of Tables, Figures, and Boxes.. viii Abbreviations and Acronyms.. ix Executive Summary .. xi 1 INTRODUCTION.. 1. Rationale for a NATIONAL FINANCIAL INCLUSION STRATEGY .. 2. FINANCIAL Sector Context.. 2. Defining FINANCIAL INCLUSION ..4. The Vision.. 4. 2 THE CURRENT STATE OF FINANCIAL INCLUSION .)

8 5. Delivery Channels.. 6. Availability of FINANCIAL Products and Services for Individuals.. 8. Transaction accounts.. 8. Savings, Pension, and Investment Products .. 10. Insurance.. 10. Sme and Agricultural Finance.. 10. FINANCIAL Consumer Protection and FINANCIAL Capability.. 12. Underserved Segments: Rural Residents, Women, and Youth.. 16. 3 NFIS FRAMEWORK .. 18. Key Enablers.. 19. Public and Private Sector Commitment / Coordination.. 19. Policy / Legal / Regulatory Environment and Supervisory Capacity .. 19. FINANCIAL Infrastructure.. 19. Key Drivers.. 19. Widespread and Accessible Delivery Channels.. 19. Diverse, Innovative, and Customer-Centric Products.

9 20. Finance for SME and Agricultural Sector Growth.. 20. FINANCIAL Consumer Protection and Capability .. 20. NATIONAL FINANCIAL INCLUSION STRATEGY 2017 2022 vii 4 COORDINATION STRUCTURE.. 21. NFIS Steering Committee .. 21. NFIS Implementation Committee .. 22. NFIS Secretariat.. 23. Working Groups.. 23. 5 MONITORING & EVALUATION SYSTEM.. 25. Tracking Implementation of The NFIS.. 25. Nfis Results Framework..25. FINANCIAL INCLUSION Data Infrastructure.. 26. Evaluation of Key Actions.. 26. 6 ACTION PLAN .. 29. 7 RISKS AND MITIGATION APPROACHES.. 34. ANNEX 1: Working Groups .. 36. ANNEX 2: FINANCIAL INCLUSION Data Sources.. 37. LIST OF TABLES, FIGURES, AND BOXES.

10 Table 1 1: Overview Of FINANCIAL INCLUSION In Zambia And Comparator Countries.. 3. Table 2 1: FINANCIAL Access Point Benchmarking, Zambia And Comparators.. 6. Table 5 1: NATIONAL Results Framework.. 27. Table 6 1: Action Plan.. 29. Table 7 1: Risks And Mitigation Approaches.. 34. Figure 1: NFIS Framework.. xii Figure 2 1: Finscope FINANCIAL Access Strand.. 5. Figure 2 2: Trends In Uptake of Formal FINANCIAL Products and Services.. 5. Figure 2 3: Mobile money Pricing and Agent Profitability.. 7. Figure 2 4: Comparative Mobile Penetrationand Active Mobile money Usage .. 9. Figure 2 5: Access to Finance for Small Firms, Zambia and Comparator Countries.