Mobile Money Increases Financial Inclusion

 
By Derrick Silimina

The African mobile money story is known to have started in Kenya in 2007 when Safaricom launched its MPESA solution for peer to peer money transfer.

Before that, due to a low rate of banking, sending money from point to point used to be a big issue. 

In Zambia today, the dawn of digital payment technologies is opening doors to a whole new generation of clientele whose very first bank account is accessed purely through their mobile phones. 

“With just my mobile phone, I can now be able to transact at low cost. For me, this is a real deal unlike before where access to an existing bank account was hectic,” says Joe Mutemwa, a mobile money account holder from Sioma District in Western Province. 

Thelma Chinyama, a Lusaka based entrepreneur, echoes Mutemwa: “My mobile money account is cost effective because it has enabled me to save my cash flow and grow my enterprise with ease and at less costs unlike a bank account that attracts monthly charges.” 

According to Zambia’s National Financial Inclusion Strategy Paper for 2017- 2022, more than 40 percent of Zambian adults have no access to quality financial products, and about 60 percent of adults who have such access do not use it. 

In vast areas of Zambia, especially remote rural regions, people still rely on the barter system (the use of unregulated and unsecured channels, to make payments and store savings). 

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

Therefore, the onset of mobile money technology is helping transform economic sectors in the Southern African country, hence it is being flaunted as a revolutionary tool that is expanding access to financial services in low-resource environments. 

“As a farmer, my mobile money account is a game-changer to me because each time I need farming inputs such as fertilizer or seeds, I just transact with some agro-dealers in town and they send me my commodities on time. 

This is unlike before when it used to be cumbersome to do business via the now defunct Lima Bank,” says Clement Tembo, a renowned tobacco farmer from Petauke District in Eastern Province. 

INCREASED USAGE 

In this context, the Bank of Zambia recently disclosed that mobile money platforms had recorded increased usage in 2020, with numbers growing to 8.6 million users by December 31 compared to around 4.85 million in 2019. 

The central bank further hinted that higher mobile money usage in Zambia has coincided with increased financial inclusion over the two corresponding years, by 10.1 percentage points last year. 

“Zambia has continued to make significant progress in the digital transformation agenda, especially in the area of digital financial services. For example, the number of active MNO (Mobile Network Operators)-based mobile money users increased by 77 percent from 4,852,040 as at December 31, 2019, to 8,607,461 as at December 31, 2020,” BoZ Deputy Governor for Operations,” Dr Francis Chipimo states. 

As recounted by Nyagaka Anyona Ouko, a Kenyan man who is alleged to be the innovator of the mobile money solution, the idea came as a ‘Eureka’ moment which has remained effective to the informal sector and has the potential of reaching out to the whole population. 

It is estimated that in Uganda, 43 percent of people have a mobile money account while in Kenya, the numbers have reached 72 percent. 

ADVANCEMENTS 

In Zambia, some enthusiastic mobile money agents say life in the world of financial inclusion has now been made easier, thanks to technological advancements. 

“The mobile money solution has undoubtedly created jobs for youths, including myself, and we depend on this sector for survival,” says Sara Chola, a mobile money agent based at Lusaka’s sprawling Kamwala market. 

Undoubtedly, just as the Internet has changed the way people search for information and shop for products, cellular phones are gadgets that are equally transforming many industries ranging from finance and travel to advertising and retail. 

According to telecommunication experts, the mobile money App is installing the SIM card of the device and can be used on regular and smartphone devices. Users can receive, withdraw, and send money without being connected to the formal banking system. 

The FinScope Survey of 2020 stated that the financial inclusion increase of 10.1 percentage points to 69.4 percent from 59.3 percent in 2015 was mainly attributable to mobile money transactions. 

With approximately 100,000 plus agent lines officially registered in Zambia, according to the Mobile Money Business Association of Zambia, the sector is contributing to the national treasury in terms of taxes. 

UNBANKED 

Lusaka-based economist Mambo Haamaundu has observed that there is a realization of very low financial inclusion as there still remains a high unbanked population in the country, especially among informal sector players. 

“For me, mobile money services are tapping into the unbanked population and as a result play a complementary role with traditional banks. For instance, cash can now easily be transferred from one bank account to a mobile money account with ease,” says Haamaundu. 

In view of the global outbreak of the Covid-19 pandemic, most businesses in Zambia have been crippled with some left gasping for breath. 

Hence Airtel Networks Zambia Plc, one of the major telecommunication firms in the country, is on course to provide the Zambian business sector with digital transaction solutions in light of the negative impact of the Coronavirus pandemic. 

Airtel Network Zambia Enterprise Business Director Lindiwe Banda announces: “We would like to be the partner of choice for any SME customer, so that we grow with them and they grow with us; such that at the point where they are moving from small to medium organizations into large corporates, we can proudly look back with them and say we did it together.”

Inflation Decline Assures Economic Stability

 

By Derrick Silimina

Zambia has started 2022 with a record low 10.2 percent inflation rate, the lowest since October 2020.

After being elected in August against the backdrop of a strong campaign message to fix the economy and restore fiscal stability, President Hakainde Hichilema’s Government has hit the ground running. 

Barely five months into office, the Hichilema administration secured a staff level agreement for a $1.4 billion economic structural adjustment programme with the International Monetary Fund (IMF). 

Arguably, the dividends of Zambia’s macroeconomic stabilisation programme have started yielding positive results and one such critical fundamental that has so far responded positively is the inflation rate, which has reduced to 10.2 percent in May 2022 from 16.4 percent recorded in December 2021. 

“The continued reduction in the inflation rate is supported by the stability in the price of many goods, stable exchange rate, and the confidence stakeholders have in our capabilities to manage the economy and bring normalcy. The situation where people’s incomes or salaries every month are buying fewer goods and services each time the rate increases will soon be over,” President Hakainde Hichilema recently posted on his Facebook page. 

The Zambia Statistics Agency (ZamStats) says the decrease of inflation by 1.3 percentage points means that on average, prices of goods and services increased by 10.2 percent between January 2021 and January 2022. 

“The slowdown in annual inflation was mainly attributed to favourable price movements in food items,” said ZamStats Interim Statistician General Mulenga Musepa. 

The fiscal space is now on the mend with a considered aim to achieve a single-digit inflation rate by the end of the year, bringing about manageable levels in the cost of living. 

OVERALL INCREASE 

A critical analysis of the month of December 2021 shows an overall increase in the prices of essential items. For instance, the cost of living for a family of five in Lusaka as measured by the Jesuit Centre for Theological Reflection (JCTR) Basic Needs and Nutrition Basket (BNNB) for December 2021 stood at K8, 359.80, a K214.52 increase in comparison to the November basket that stood at K8, 145.28. 

According to JCTR’s monthly bulletin, the increase in the prices of fuel also appears to have had an impact. While justified especially in view of key variables such as the exchange rate and the price of crude oil per barrel on the international market, its impact on the cost of living is undeniable.

 

PETROLEUM PRODUCTS 

Recently, the Energy Regulation Board (ERB) reduced the pump price of petroleum products by K1.32 for petrol and K1.22 per litre for diesel. 

In a statement, ERB Board Chairperson Reynolds Bowa said that according to the market fundamentals for the month of December 2021, international oil prices for petrol and diesel recorded a notable decline with the Kwacha also appreciating against the United States Dollar. 

Bowa noted that the petrol prices declined by 11.56 percent from $96.39 cents per barrel recorded in October 2021 to $85.25 cents in December 2021 while Diesel Prices also declined by 10.64 percent from $93.27 cents per barrel to $83.35 cents per barrel. 

The local currency, the kwacha, has opened the year with a gain of nearly seven percent against the US dollar, with the central bank projecting inflation to average 15 percent next year and 9.3 percent in the first three quarters of 2023. 

Economic analysts observe that the IMF Staff Level Agreement with the Zambian Government and sustained supply of foreign exchange, particularly from mining companies and foreign investors in Government securities, has contributed to the rebound of the Kwacha. 

Despite the recent hike in transport fares of 18 to 34 percent early this year, the USD-ZMW pair opened the forex market with a bullish Kwacha and as at January 31, 2022, the local currency traded at 17.23/18.89 against the US dollar. 

PRICING CARTELS 

In this context, the Zambian Roads and Highway Safety Group (ZRHSG) has urged the Zambian Government to stop the pricing cartels within the public passenger bus sector and allow each bus operator to determine their own bus fares. 

The Highway Safety Group has noted with concern the continued existence of this pricing cartel for many years that benefits only the bus owners and tends to hold to ransom public bus passengers who have no choice but to pay the fixed bus fare. 

The ZRHSG believes that the pricing cartel has always left passengers disadvantaged as they have no choice when it comes to bus fares as all fares are pegged at the same cartel price and bus fare regardless of the type and standard of bus services being provided. 

“The Highway Safety Group looks forward to safer, efficient and cheaper modes of passenger transport as better and newer models of buses are introduced on our roads,” ZRHSG Group Admin Mthoniswa Banda said. 

For this reason, it is envisaged that the long-term odds for the country’s economy remain bright, especially if the New Dawn administration sticks to its campaign promise of rooting out Government corruption and prudently spending public resources.

Digital payment fraudsters at work

 

By Derrick Silimina

Digital technologies such as mobile wallets via telecom networks are helping to promote financial inclusion in many developing countries.

In Zambia, fraudsters are taking advantage of users and threatening the growth of digital payments.

Sitting unsettled in her business kiosk along Cairo road – one of the busiest highways in Lusaka, Zambia’s capital –, 25-year-old Susan Chembo narrated through tears how she had been conned of her hard-earned money. 

“I’m requesting you to send your money via this number,” the message read, then provided a mobile number.

Coincidentally, Chembo had just told her uncle that she would send him money to help clear her goods at the border. She assumed the anonymous message was from her uncle who works as a clearing agent at Kazungula border in southern Zambia. 

So, she sent 5,000 kwacha (about $ 285) to the number. Her uncle never received the money. Chembo reported the incident to the police, but the mobile number to which she sent the money was no longer in use. It was a fraud and the perpetrator could not be traced.

Mobile digital technologies and innovations such as mobile wallets are becoming popular in Zambia and helping to promote financial inclusion. 

Many Zambians, especially in low resource environments, now rely on their mobile-phone service providers to host virtual “bank” accounts that are easier to access than traditional banking systems.

With its population estimated at 18 million, Zambia’s two largest mobile operators, local units of Airtel and MTN both supply mobile-money services. 

In April 2018, MTN announced a concerted effort to raise the number of agents in the country to expand usage of its platform while the state-owned Zamtel also supplies standard mobile-money services through its kwacha brand and smartphone mobile e-wallet app, Zampay.

The Bank of Zambia recently disclosed that mobile-money platforms had recorded increased usage with numbers growing to 8.6 million users by 31 December 2021 compared to around 4.85 million in 2019. 

Its statistics showed the number of mobile-money agents in Zambia stood at 47,000 by the end of 2018 compared with 23,000 in the previous year. The number of mobile-money accounts increased from 2.3 million at the end of 2017 to 4.3 million in 2018.

Mobile-money services are a major contributor to financial inclusion in Zambia. However, these platforms have lower security checks than traditional banking systems and have therefore become a target for criminals and fraudsters who take advantage of loopholes to con unsuspecting users.

Raymond Solochi who recently also lost K 500 ($ 30) in a mobile-money scam explains how these fraudsters operate. He says, “these thieves are just using psychology, because they know that at one point or another someone might be sending money especially during pay days.”

If left unchecked, digital fraudsters have the capacity to cripple digital payment platforms. Policy makers in Zambia are therefore taking the issue seriously and devising means to check fraud over digital payment platforms.

“As we continue to migrate customers towards digital technologies, it is important to safeguard customer funds, especially new users of such services. We must ensure that we fully exploit these tools. It is therefore imperative that cyber-fraud incidences are addressed to ensure the gains made so far in financial inclusion are maintained and enhanced,” Denny Kalyalya, governor of the Bank of Zambia, recently told stakeholders at a financial event.

Additionally, the Zambia Information and Communications Technology Authority (ZICTA) is on top of things and says it is alert and always sends messages warning people against posting their contact information on social-media networks and to keep their PIN numbers secret.

Transformation Through Textiles

By Derrick Silimina

With his pen neatly clipped in the pocket of his blue work suit, Fabrice Tuyishime gazes at the factory floor, where scores of women are sewing garments, stamping logos, and pressing out wrinkles from various apparel destined for both local and international markets.

After a hard day’s work at Rwanda’s renowned garment factory, Tuyishime is in good spirits.

“From the day I got employed here, I worked hard to attain my financial goals and carried out my duties exceptionally, and my hard work paid off recently. I was first employed as a general worker and rose to first a supervisor, and then a year later, a production manager,” Tuyishime told ChinAfrica.

The production manager is among thousands of local Rwandan employees who have benefited a lot since the establishment of the Chinese apparel manufacturing company that has lifted them out of poverty.

It is a known fact that many textile industries in developing countries have died a natural death after years of downturn. But in Rwanda, the Chinese garment factory is transforming the lives of local people through job creation and improved household income.

As China intensifies its technology and skills transfer and creates more jobs amid Africa’s quest to boost its development, experiences on the continent point to a bright outlook.

A source of livelihood

In Gasabo District on the outskirts of Kigali, Rwanda’s capital, just 4 km from the Kigali International Airport, stands the Kigali Special Economic Zone phase 1, which houses one of the most modern garment factories in East Africa - Pink Mango C&D Products Rwanda, a leading manufacturer and exporter of bags, garments, home textiles and packaging for a wide range of internationally recognizable brands.

Imports of secondhand clothes from developed countries continue to rise in many African countries, thereby stifling the continent’s potential to grow its own textile industries. Most donated secondhand clothing is now sold for reuse in markets in Africa. What seems a neat solution to millions of tons of clothing discarded annually is definitely undercutting the local garment manufacturing industry.

For this reason, in its quest to enhance technology transfer and grow the local textile industry, Pink Mango C&D seeks to recruit a total of 7,500 workers in Rwanda and turn itself into the largest and best jacket garment factory in Africa, following an agreement that was inked in 2019 with the Rwanda Development Board (RDB) for the establishment of a modern garment factory in the Kigali Special Economic Zone that will produce garments for both the domestic and export markets.

Since its establishment, Pink Mango C&D is certainly transforming the lives of local Rwandans through job creation and improved household income as the Chinese experts at the factory have equipped local staff with knowledge and skills in tailoring; some are now experts in fashion design and production.

Tuyishime is in charge of production and interviews prospective workers, mostly women who took long, dusty bus rides from far and near villages and have waited for hours to apply for work at the modern textile firm.

“It used to be tough for me to support my family; but now I am assured of a monthly salary that enables me to take care of my household with ease. I have even bought a piece of land where I plan to build my house, something I never thought would happen. I am also able to pay school fees for my children. Thanks to the Chinese experts for imparting skills for me to be able to take care of my family,” Anita Kaberuka, one of Tuyishime’s co-workers, said.

Secondhand clothing

It is estimated that East Africa alone imports over $150 million worth of used clothes and shoes, largely from the U.S. and Europe.

In 2017, the United States Agency for International Development estimated that the industry employed over 350,000 people and generated $230 million in government revenue. It also supported the livelihoods of an additional 1.4 million in the East Africa Community bloc.

According to global trade experts, Africa has one of the largest used clothing markets in the world with 80 percent of people on the continent wearing secondhand clothes that are mainly imported from the U.S., Europe, India and Pakistan.

However, those clothes are not necessarily given away once in Africa but are often sold through intermediaries which retail them to local communities.

While this trade is a form of textile recycling, there can be broader negative social and economic consequences for the end markets. 

The influx of secondhand clothing into African markets has created employment, albeit precarious. But the trade has also displaced local garment manufacturing bases – and it may be suppressing the future development or revival of similar domestic industries.

There is a widespread belief that the popularity of used clothing contributed to the collapse of the domestic textile industry in many parts of Africa in the 1980s and 1990s and that the continued use of used clothing is portrayed as undignified and eroding African pride.

Local industry development

In a bid to resuscitate local manufacturing, East African governments, including those of Kenya, Tanzania, Uganda and Rwanda, agreed in March 2016 to increase tariffs on imported used clothes with the intention of phasing them out by 2019.

In this context, Rwanda has been actively exploring the possibility of banning the import of secondhand clothes. In the 2016/17 financial year, the East African nation raised the tax on imported used clothes from $0.20 to $2.50 per kg and to $4 in the next financial year.

RDB Deputy Chief Executive Officer Emmanuel Hategeka recently affirmed that the country has been using fiscal measures to progressively discourage the importation of secondhand clothes because it was hurting the growth of the domestic textile and garment industry.

“The investment of Pink Mango C&D will upskill Rwandans, giving them access to productive jobs and hence ensuring a better standard of living. Secondly, the investment will not only enable us to increase our exports, but also reduce imports of clothing. Therefore, we are achieving two goals by signing this deal,” Hategeka said during the signing ceremony.

He revealed that the establishment of Pink Mango C&D will support the building up of a garment industry ecosystem attracting other players in dyeing, knitting and weaving as well as accessories suppliers to open shops in Rwanda, hence it’s an exciting addition to the growth of the local textile industry.

According to the RDB, the decision to tax used clothing has already helped develop the local textile and shoe industries as production has increased, and the policy is already producing positive results.

C&D Group Chairman Gu Jingyong stressed that his company is not only pursuing profits in Rwanda, but has taken into consideration the long-term positive impact of the investment in the East African country.

“We have brought technology and we hope to improve the living standards of the local people,” Gu added.

Grocery business on the way up

 

By Derrick Silimina

While the idea of starting a business is on many people’s wish-list, the biggest hurdle to cross for many is the capital and this is followed by managerial skills on the heels.

In Zambia, one of the simplest forms of a business to start is a grocery store. It is the commonest business one can come across in any area where people are found simply because the stocks relate to everyday human desires. 

Lufunda Zangi, 29, is one of the young entrepreneurs based at Kyawama Market in Solwezi, making a living from grocery business. 

“I started my grocery business in 2014 with cooking oil as my main product. I then began to slowly add other products such as sugar, salt, baking powder, soap, rice and other products which are found at my store today,” Zangi remembers. 

With K500 as his initial capital, Zangi now has over K4,000 in cash and described the grocery business as good because of his ability to look after the family through it. 

He says potentially, his business is able to make about K500 profit per week. In February 2020, Zangi got encouraged by a friend to enroll for the business development training programme which is powered by Kansanshi Mining Plc. 

Zangi attended nine physical training workshops before they were put on hold due to the outbreak of Covid-19. Due to his busy schedule at the market, Zangi was not able to continue with the training via radio but the Fortune World mentoring team encouraged him to apportion time for the radio training as it was equally effective. 

“The topics I have grasped so far have helped me with better customer care. I am now able to identify more market opportunities. Before attending the training, my business was failing due to poor customer relations, but the situation has since improved,” he affirmed. 

Currently, Zangi has stock worth K3,500 while his business is worth about K8,000. In future, he plans to open a shop to host the growing business with more space to stock goods as some of his goods are currently being stored in other people’s shops. 

He further states that his intention is to attend training in poultry farming so as to embark in that business. Zangi is delighted, as the business development training has also helped him with proper records management. 

“Thank you KMP management for facilitating the business training through the FWIL and I urge them to continue with the same spirit of empowering local SMEs with knowledge,” he said. 

The FWIL mentoring team urged Zangi to register his business so that he is connected to the chamber of commerce for further capacity building opportunities.

Taking Onion Trading to Another Level

 

By Derrick Silimina

As the trading of onion becomes competitive on the local market, many marketeers are taking the agribusiness venture to another level

One such seasoned marketeer is Susan Kapambwe who operates from Kyawama market in Solwezi District of North-Western Province. 

At the age of 40, Kapambwe’s area of speciality is the buying and selling of mainly onions and tomatoes. 

“This onion business is very lucrative as it has high profits. I buy onions from Kapiri Mposhi and Nakonde, which I come to resell here in Solwezi. I started the onion business in 2010 with a minimal capital of K500, and I have since grown my capital base to K8,000 in terms of cash at hand,” Kapambwe affirms. 

Kapambwe explains that she procures one 50 kg bag of onion at K600, and upon selling the onion in smaller heaps at retail price, makes about K1,500 from one bag, making a profit of K900 per bag. At most, she procures about eight bags at the total cost of K4,800 and one bag takes about five days to sell. 

“To ensure my bags of onion sell quicker, I distribute some of them to fellow marketeers who sell on my behalf. Each marketeer then brings a K1,200 while retaining K300 sales commission. My profit per bag comes to about K600 when sold through agents.” 

She said the onion business has been of great help to her as she is currently building a house where she has already spent K10,000 on building materials. 

In 2020, Kapambwe decided to sharpen her business proficiency and enrolled for the business development training conducted by Fortune World Investment, courtesy of the Kansanshi Mining Plc. At the time, lessons were still being conducted physically but due to the Covid-19 outbreak, classroom based training was put on hold, and she has continued following lessons on radio. 

Kapambwe has so far followed ten lessons via radio training and affirmed that the training has given her capacity to deal in more than one product at once. 

“Prior to attending the training, I had poor financial management practices and my business remained stunted,” she stressed. 

Kapambwe says after having been equipped with the knowledge in Financial Management, it has made her a better manager, hence being able to grow her business to its current state. 

“I now plan to diversify my business to rearing village chickens that will lay eggs for hatching to increase the number of birds, while extra fertilized eggs would be sold at K150 per tray,” she said. 

Having felt the impact of the FWIL business training, Kapambwe hopes to enroll for a piggery rearing course in future. She anticipates diversifying into rearing pigs that will be supplied to supermarkets in the form of processed pork. 

“I intend to register my business and have asked the FWIL mentoring team for guidance because my initial capital in the piggery is K10,000 which I hope to raise in the next 6 months,” she said. 

Apart from running her own business, Kapambwe belongs to a 40 member cooperative which was recently registered. The group intends to venture into crop and poultry farming on a five hectares piece of land which she bought and offered. 

“Thank you KMP management for the knowledge they are providing through the business training, which has made my business grow,” Kapambwe affirmed.

Training tailors, cooks or service staff

 

By Derrick Silimina

Catholic nuns are providing skills training to young women in Zambia to help them escape poverty.

Poverty is widespread in Zambia, with rural areas more affected than urban areas. Moreover, women and girls are particularly disadvantaged in a largely unequal society.

Many rural poor migrate and settle in slum areas often located in or on the outskirts of urban centres. One such area is Chawama, one of Lusaka’s largest slums.

The Missionary Sisters of the Holy Family, a Catholic parish based in Lusaka, try to help women and adolescent girls in Chawama. 

Inside their Cheshire Divine Providence Home, they have established a Homecraft training school, a computer school, primary and secondary schools. The Homecraft training school offers various skills training such as cookery, tailoring, handicraft and knitting among others to young women.

Catholic missionaries like the Sisters of the Holy Family have been present in Africa since the 18th century. On top of spreading their religious doctrines, they are involved in socio-economic development programmes in many African countries.

“We teach the young ladies and mothers how to improve their life in society and in their homes. We empower them with some skills in tailoring and designing, cooking and baking, handicraft and knitting. Through all these skills, we believe that we are helping some of these Zambian women to fight poverty in society,” says Magdalene Wanja, sister-in-charge of the skills training school.

The Homecraft training school enrols over 100 students per year. Most of its trainees end up working in restaurants, tailoring shops, hotels, and lodging facilities. 

Some of the young women start and run their own small businesses. “I look forward to graduating and finding a job at a hotel or a resort so that I can raise income to start my own restaurant in future,” says Mirriam Munwela, one of the students doing a tailoring and catering course.

Emeldah Lungu, 28, another student at the training school, explains that it is her dream one day to become a fashion designer. 

“My career is slowly unfolding. My passion has always been to become a fashion designer. Thank you Sisters at Homecraft training school for adding value to what I want to become. I can’t wait to live my dream and lift myself out of poverty,” Lungu stated.

The Catholic missionaries are happy to see their skills development programme helping women in Chawama. 

Sister Wanja affirms: “We are happy that the response from women is overwhelming despite the financial challenges they go through to manage to pay for their one and half year training as the school depends on their tuition fees to operate effectively.”