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Thursday, July 18, 2024

Zimbabwe records financial sector growth since 1980

Story by Stanley James, Business Editor

AS Zimbabwe celebrates 44 years of independence on the 18th of this month, government’s financial inclusion policy is achieving the desired results with the number of people with bank accounts increasing to over four million.

Official information contained in a recent central bank report shows that before independence, the financial industry was dominated by foreign owned banks with the black majority facing challenges in terms of opening bank accounts.

Government interventions in opening the banking sector have, however, seen Zimbabwe recording phenomenal growth in the industry, spurred by an influx of locally owned banks.

While the journey to banking sector growth was partially characterised by the collapse of some banks, the trend proved to be a good lesson to those that have defied the odds, thereby dominating deposits, lending, and assets.

As a result, a financial inclusion strategy embracing women, youths and other marginalised communities was put in place through opening the Empowerbank and the Women Micro Finance Bank.

The number of bank account holders has also grown to four million.

“Indeed, it has been a positive trend in as far as the growth of the banking sector is concerned. Remember, there were at least two commercial banks serving the entire country shortly after independence, however due to the liberalisation of the banking sector the move created opportunities for locals to venture into the industry. Yes, there were challenges as some banks collapsed, however due to more interventions we have seen a banking sector that is now strong with locally owned banks been performing better and serving the interests of the economy,” said an economist, Dr Prosper Chitambara.

With the financial inclusion strategy focusing on modalities to ensure banks play a leading role in economic growth by lowering costs of opening accounts, offering incentives to depositors, and reducing the bank charges, expectations are high that if implemented more Zimbabweans will have access to bank accounts.

Zimbabwe boasts of 19 banks, with 14 being commercial entities, four building societies and one savings bank.

This has become a source of national pride with Chartered Governance and Accountancy Institute in Zimbabwe chief executive officer, Dr Lovemore Gomera commending government for implementing policies that have resulted in the growth of locally owned entities, an element that did not exist during pre- independence Zimbabwe.

“The banking sector is on a strong footing thanks to reforms instituted. What excites me is the compliance of the industry to good ethics, however the banks should lend more to the public to consolidate current gains. Furthermore, foreign shareholders are still needed in local banks in order to grow the balance sheets and remain viable otherwise the banking sector has really realised more positive merits as evidenced by increased profits, however there is also need to boost confidence so that more people can deposit their money in banks,” noted Dr Govera.

The latest Finscope survey states that banks play an important role towards the emancipation of societies to the extent that the strides achieved after independence if sustained will positively affect the nation’s aspirations for an upper middle-income society by 2030.

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