The Nexus between mobile money regulation, innovative technology and the promotion of financial inclusion in Zimbabwe
Abstract
The advent of mobile money innovations has given people in rural
areas, informal settlements and other poor communities an opportunity
to participate in Zimbabwe's mainstream financial economy. However,
the technology-driven money services have presented some
challenges to the traditional banking sector in general and the
regulation of financial services in particular. Firstly, most mobile money
services are products of telecommunication corporations, which are not
banks. Telecommunication companies use their network reach to
provide mobile money services via mobile devices at a cheaper cost
than banks across the country in Zimbabwe. As such, banks face
unprecedented competition from telecommunications companies that
are venturing into financial services. It also appears that prudential
regulation of banks cannot keep up with the fast pace at which
technological innovations are developing and this has created a
disjuncture between the regulation and the use of technological
innovations to promote financial inclusion in Zimbabwe. The Banking
Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act
[Chapter 22:15] 5 of 1999 and the National Payment Systems Act
[Chapter 24:23] 21 of 2001 have a limited scope in terms of the
regulation of mobile money services in Zimbabwe. The Ministry of
Finance and Economic Development launched the National Financial
Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial
inclusion of the poor, unbanked and low-income earners in Zimbabwe.
However, the NFIS appears to push more for bank-led financial
inclusion than it does for innovation-driven initiatives such as mobile
money services. This article highlights the positive influence of mobile
money services in improving financial inclusion for the poor, unbanked
and low-income earners in Zimbabwe. The article also seeks to point
out gaps and flaws in the financial services regulatory framework that
may limit the potential of mobile money services to reach more people
so that they actively participate in the Zimbabwean economy. It is
submitted that the Zimbabwean mobile money services regulations and
the financial regulatory framework should be carefully amended in line
with the recent innovations in mobile money to adequately regulate the
use of mobile money services and innovative technology to address the
financial exclusion of the poor, unbanked and low-income earners in
Zimbabwe.
Collections
- PER: 2021 Volume 24 [71]