Digital payments – Key to Enhanced Regional Trade

 

By Mbuyoti Silimina 

Consumers around the world, Zambia included, have shown an increasing desire to use digital financial services. This has, in part, been influenced by the proliferation of affordable mobile devices.

Digital payments through platforms such as eWallet, ePay and mobile money, among others, were on the rise prior to the COVID-19 pandemic and they continue to rise as the pandemic rages.

When households have secure bank accounts and reliable channels for making payments, they are in a better position to make large purchases and to save money for future purposes. As a result, when most people in society have such financial tools available to them, businesses thrive and are more likely to invest in those communities with ease.

‘‘Digitalisation is already the future of financial services,” said Ministry of Finance Permanent Secretary Mukuli Chikuba. “Adopting advanced information technology and online business models will enable financial service companies to achieve greater scale, reduce operating costs, penetrate new markets and better understand the needs of customers.”

Many developing countries including Zambia, aim for universal access and usage of basic financial products but they have a long way to go.

Trade experts believe that quality digital financial products and services also provide cross border traders with the mechanisms to make payments and import their goods, an idea that enables them to manage their businesses in a more efficient manner.

The COMESA Business Council (CBC), a business member of the regional organisation which represents the interests of the private sector at a regional level, offers services that go beyond advocacy to actively promote business participation in regional integration, investment and global trade.

CBC Chief Executive Officer Sandra Uwera has noted that micro, small and medium enterprises (MSMEs) lack affordable and effective platforms to accommodate digital cross-border payments.

“In an effort to address this challenge, CBC’s Digital Financial Inclusion program, piloted in nine countries (Egypt, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Tanzania, Uganda and Zambia), is expected to catalyse the transition of MSMEs from a cash-dominant to a cash-lite economy, where they have access to affordable, interoperable, secure and real-time digital financial transactions,” Uwera said at the Financial Services Regulators Sub-regional Stakeholder Meeting in October 2020.

More than 40 percent of Zambian adults do not have access to quality financial products and about 60 percent of adults may have that access but do not use it, according to Zambia’s National Financial Inclusion Strategy Paper for 2017-2022.

In Zambia, especially in remote rural areas, some traders of goods and services still rely on a barter system, or use unregulated channels to make payments and store their savings through minimally regulated village banking groups, locally known as chilimba.

According to a World Bank study titled “Enhancing Financial Capability and Inclusion in Zambia,” the main reasons for this poor showing are lack of funds, high bank charges, time-consuming travel to a bank branch, and lack of trust in the financial sector.

For this reason, most financial institutions such as Atlas Mara Zambia, a large retail bank with headquarters in the capital Lusaka, recently opened two branches in the remote North-Western Province, one in Mwinilunga and the other in Zambezi districts respectively.

“We are bringing financial services to the Zambezi District after an absence of over 30 years,” said James Koni, the bank’s managing director.

In an interview, Febian Matanda – a cross border trader from Mwinilunga district responded enthusiastically to this development, “Having a bank here will enable me to save and be more secure financially.”

Matanda, a supplier of pineapples at Kasumbalesa border post near the DR Congo added that by opening a bank account, he can easily get a loan and expand his business in the neighbouring countries such as Angola and DR Congo.

For Matilda Siame, another cross border trader from Livingstone feels that banks that provide their clientele with electronic access to funds making transactions easier, efficient, effective will help lessen the cost of doing business among MSMEs in the country.

“The onset of digital financial services such as mobile money, Zanaco Xpress and other online payments has really scaled-up my cross border business as I can transact at anytime and anywhere without difficulties of accessing funds from the traditional financial services such as banks,” Siame stated.

For this reason, most banks are excited to invest in information technology in a bid to reach out to unbanked populations countrywide by offering digital financial services as a way to go especially living in the era of COVID-19. Most financial institution’s key strategy is to offer a secure digital network that protects customer data from hackers and ensures that online financial transactions are safe from fraud and theft.

Atlas Mara CEO James Koni affirmed, “At the centre of our offer is our first-class digital platform. This shows our commitment to support the government’s vision for financial inclusion for all Zambians.”

Therefore, digital payment ecosystem in the ‘new normal’ would expand cross border traders market for financial solutions aligned to sustainable development goals and promote regional cooperation and governance. More importantly, digital financial services can bring more of the general citizenry into the financial system, support economic growth and promote shared prosperity.

Zambia Preserves a Source of Life

 

An environmental expert (left) shares his views on the value of technology in environmental protection 

- Pictures by YOTI Graphix

By Derrick Silimina

Keeping rivers flowing freely and safeguarding its ecological system is vitally important for the future of people and nature. Hence, Zambia has over the years put in place policies, strategies and programs that promote conservation of the fauna and flora in the country

Africa is a haven of excellent natural conditions and is rich in freshwater bodies with great potential to revamp its socio-economic development.

In Zambia, water resources form the basis of almost every aspect of life and include major rivers such as the mighty Zambezi River, Chambeshi River, Kafue River and Luangwa River. Others include Lake Kariba and the Itezhi-tezhi lake which all provide sustenance to animals, human life and biodiversity.

Supporting livelihood

Apart from sustaining biodiversity, water resources in the southern African country are critical for meeting the basic needs of industrial development, sanitation and waste management, factors that drive the social, economic, political and cultural development of the population along the rivers.

For instance, fishing is a big business in Zambia and is one of the sources of income for most of the people that live along major rivers such as the Zambezi.

"This business is our only source of livelihood here and without it, most of us wouldn't be able to provide for our families," said Memory Simushi, 32, who has been a fishmonger in Mongu district in western Zambia since 2018.

Each day around 3 a.m. when many people are deep in slumber, Simushi and other women of Nalolo area in Mongu district trek along the Barotse flood plains to buy the best fish from fishermen in the lower Zambezi fishing camp.

The two-hour journey on foot to reach the camp is quite challenging as the women have to walk in darkness. The fish they hope to buy is known as litapi in Lozi. The women will resell what they got in the fishing camp in Mongu town, a source of income to support their families. The fish sell like hot cake in the local market at K400 ($20) per basin, from which they make a profit of K100 to K150.

According to the Ministry of Fisheries and Livestock, the fishing industry contributes 3.2 percent to Zambia's GDP and provides more than 70,000 metric tons of fish per annum.

On the other hand, the upper Barotse flood plains, renowned for their annual floods, still bring pride in anticipation of an abundant harvest.

The Zambezi River 

Protecting waters

Keeping rivers flowing freely and safeguarding its ecological system is vitally important for the future of people and nature. Hence, Zambia has over the years put in place policies, strategies and programs that promote conservation of the fauna and flora in the country.

For instance, the National Conservation Strategy was formulated in 1985 which provided a solid base for a coordinated approach to the country's environmental management culminating into the promulgation of the Environmental Protection and Pollution Control Act No. 12 of 1990. This piece of legislation established the Environmental Council of Zambia, now the Zambia Environmental Management Agency (ZEMA) as a statutory body charged with the mandate to regulate water, environmental management and pollution control, among others.

In 1999, the first National Biodiversity Strategy and Action Plan (NBSAP) was formulated to respond to new challenges and align it to global frameworks, including the Strategic Plan on Biodiversity from 2011 to 2020 and its Aichi Targets, according to the Ministry of Lands, Natural Resources and Environmental Protection.

The second NBSAP represents Zambia's quest to domesticate broader international frameworks including the Sustainable Development Goals and other national obligations under the international instruments which the country is party to, including the Convention on Biological Diversity, the UN Framework Convention on Climate Change, as well as regional SADC protocols on wildlife, water, fisheries, forestry, and biosafety among others.

However, recent investigations by ZEMA in Copperbelt Province have revealed that some of the most affected water bodies having high levels of pollution are all tributaries of the Kafue River, which in turn flows into the Zambezi River while the major pollutants of the water bodies were copper, cobalt, and iron among others.

"These pollutants have adversely affected the said water bodies resulting in among other effects, siltation of stream beds, changes to the water chemistry, and impact on aquatic life and adversely affecting other water users including domestic users," Lloyd Kaziya, former minister of Water Development, Sanitation and Environment said in a ministerial statement on pollution of water sources as a result of mining activities in north-western Zambia.

It is for this reason that, ZEMA has instituted investigations and increased the frequency of monitoring of industries to ensure control and compliance to national standards for emissions not only into water but air as well, in a bid to revive aquatic life and its surroundings.

Consequently, there is a global concern to safeguard and restore the ecological environment of rivers as transboundary water bodies cross national and administrative borders across the globe, thereby supporting majority of the world's population and ecosystems.

In the Southern African region, eight countries, namely Angola, Namibia, Botswana, Zimbabwe, Zambia, Tanzania, Malawi, and Mozambique, share the Zambezi River basin, the fourth largest in Africa. Approximately 30 million people live in the basin, which has its headwaters in Zambia. The main river channel forms the borders between Zambia and Zimbabwe, and Zambia and Botswana before reaching the ocean in Mozambique.

Locally, in its continued effort to conserve biodiversity while improving the welfare of local people, the Wildlife and Environmental Conservation Society of Zambia has embarked on a Conservation and Forest Management project in the Mafinga Hills of northern Zambia, and the project has trained about 60 people from three villages where the inhabitants are mostly traditional pastoralists who act as guardians of biological diversity. They also play a critical role in the preservation of the headwaters of the Luangwa River.

Conservation cooperation

China and Zambia seek to explore innovative ways to promote conservation of biodiversity amid growing threats linked to human behaviour and climate change.

Recently, Chinese Ambassador to Zambia Li Jie shared his thoughts with Zambia's Minister of Fisheries and Livestock Kampamba Mulenga, and called on the two sister nations to adhere to the principle of mutual respect and win-win cooperation.

The Chinese envoy affirmed that Zambia is blessed with excellent natural conditions and is rich in freshwater and forage resources with great potential for the development of fish farming and livestock husbandry.

"China is willing to work together with Zambia to fully implement the outcomes of the FOCAC Beijing Summit and promote practical cooperation in all fields," Li said.

And Mulenga expressed her sincere appreciation to the Chinese side for the long-term support and assistance to Zambia's economic and social development and people's livelihood, adding that she expects more Chinese companies to come to invest in Zambia and bring advanced technology. CA

Reporting from Zambia

Taking it to the Bank

© stepmap.de

By Derrick Silimina

 

Financial products such as bank accounts and bank loans help people to manage their money and invest in assets such as houses and education.

When households have secure bank accounts and reliable channels for making payments, they are better able to make large purchases and to save money for the future. As a result, when most people in a community use financial products, businesses are more likely to invest in those communities.

That is why many developing countries, including Zambia, aim for universal access to basic financial products. But they have a long way to go to get there. More than 40 % of Zambian adults have no access to quality financial products, and about 60 % of adults who have such access do not use it, according to Zambia’s National Financial Inclusion Strategy paper for 2017-2022. In vast areas of Zambia, especially remote rural regions, people still rely on cash or barter, or use unregulated and unsecured channels, to make payments and store savings.

The main reasons for this poor showing are lack of funds, high bank fees, time-consuming travel to a bank branch and lack of trust in the financial sector, according to a 2017 World Bank study titled “Enhancing Financial Capability and Inclusion in Zambia”.

Slowly, however, this is beginning to change. Atlas Mara Bank Zambia, a large retail bank with headquarters in the capital Lusaka, recently opened two branches in the remote North-Western Province, one in Mwinilunga and the other in Zambezi. “We are bringing financial services to the Zambezi District after an absence of over 30 years,” says James Koni, the bank’s managing director.

Customers responded enthusiastically. “Having a bank here will enable me to save and be more financially secure,” says Clement Mufwaya, a pineapple farmer from Mwinilunga District. “Also, by opening a bank account, I can get a loan and expand my business.”

The government is asking other banks to take similar steps. It is also asking banks to provide electronic access to customers in remote locations.

‘‘Digitalisation is already the future of financial services,” says Mukuli Chikuba, permanent secretary of the Ministry of Finance. “Adopting advanced information technology and online business models will help financial service companies operate on a bigger scale, cut operating costs and better understand the needs of customers.”

Expanding to rural areas and offering online services is costly, however. Most likely, banks will need to merge with or acquire other banks to become big enough to invest in information technology and to reach out to unbanked populations.

Some merger activity is already in evidence. For example, Atlas Mara acquired Finance Bank Zambia in 2016 and subsequently merged the acquired bank with an existing subsidiary. The combined institution has a network of 65 branches, a roster of 23 external agencies and a collection of 176 automated teller machines in ten Zambian provinces.

The bank’s strategy is to offer a secure digital network that protects customer data from hackers and ensures that online financial transactions are safe from fraud and theft. “At the centre of our offer is our first-class digital platform,” says Koni. “This shows our commitment to support the government’s vision for financial inclusion for all Zambians.”

Derrick Silimina is a freelance journalist based in Lusaka. He focuses on Zambian agriculture and sustainability issues.
derricksilimina@gmail.com