Banks need to do more and promote financial inclusion for MSMEs

Albert Chavhunduka

A local think-tank, SIVIO Institute has revealed that financial access in Zimbabwe remains a challenge and urged banks to make banking simpler and promote the growth of Micro, Small and Medium Enterprises (MSMEs) in line with the national sustainable development goals.

As part of efforts to prioritise the country’s development trajectory, in 2016 government introduced the National Financial Inclusion Strategy (NFIS) a move which was motivated by the need to ensure that economic agents were adequately integrated within existing financial services inclusive of savings, credit and insurance provided by private and government players across the country.

In its latest 2022 survey report on MSMEs, the institute revealed that despite some progress which Zimbabwe has recorded so far with regards to financial inclusion, a number of sectors still remained totally excluded for the country to be said to have promoted financial inclusion.

“A key concern is that financial access should be as inclusive as possible taking into consideration age, race, gender and physical ability while also cutting across provincial regions in Zimbabwe. We observed that mobile money has significantly improved inclusion in all provinces followed distantly by investment access and banking,” read the report.

“The lowest performing indicator is insurance access as shown by the low percentages of insurance even in the capital Harare with 17 percent and the second largest city, Bulawayo, with 18 percent. There is need to make banking simpler for MSMEs. Improving their banking acess will have a ripple effect on insurance, access to loans and other forms of short-term financing.”

The MSMEs report further exposed the exclusion and poor participation of youths in the country due to lack of funding for youth start-ups.

“We noted that enterprise formation among young people is lower but increases with age. Therefore, our data demonstrates that young people are not fully included in the financial inclusion discourse. Enterprises formed by the youth tend to be starved of start-up financing. Our findings demonstrate that the establishment  of an enterprise is based on one’s capacity to mobilise support from family and other informal networks,” read the report.

“There is limited evidence to demonstrate the impact of government and NGO-led efforts in catalysing entrepreneurship. Additionally, existing financial products are rigid. There is need to include flexibility in the design of financial products.

“The banking infrastructure is ill equipped to respond to the changes that have taken place within the economy. The strict compliance regulations have only served to alienate would-be clients.”

The report added, “Furthermore, interventions aimed at small enterprises in rural and urban areas and women-led entities need more careful thought. At the moment, they have not made a significant dent on poverty. There is need for a more unified framework which connects funding entities, business, training organisations, government and compliance departments such as ZIMRA into coherent and robust strategy.”

“Gender dynamics are especially important for enterprises as they grow. The dearth of women as founders in larger entities points to a lack of support for growth possibly because of cultural, marital and community expectations which limit women business owners from growing.”


The study investigated the level of financial inclusion of Micro, Small and Medium enterprises in

Zimbabwe. We determined that the key factors that affect access to ‘formal financial products and services” are not evenly distributed in Zimbabwe’s ten provinces.

“We noted that the barriers to inclusion for small enterprises can be summed up as lack of flexible and affordable financing, harsh compliance laws and lack of information on the best fit for using and sourcing financial products and services,”.

The report noted that addressing these three concerns for targeted groups such as youth, women and founders in marginalised areas would create more inclusive systems that promote access amongst MSME’s.

“Our study also indicated that in Zimbabwe there are provinces that require urgent government and development partners’ action to promote financial inclusion. These areas include Midlands, Masvingo,

Mashonaland Central and in some cases Matabeleland South,”.

It noted that the role of gender in promoting exclusion was apparent as women business owners struggled to grow their enterprises from micro to medium entities, adding that the exclusion of women will have a cumulative negative impact on households and communities and should be considered as especially important as financial inclusion efforts continue.

“Promoting products and services alone is not sufficient to promote inclusion. The products and services must be innovative in form and function to address the needs of key groups. Alongside innovative financial services, information access for all groups will widen the options available for MSME’s and promote innovation and risk taking by local enterprise founders,” the report noted.

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