The Policy Monitoring and Research Center has recommended that the government and other stakeholders need to upscale efforts to provide rural financial services by focusing on support towards good product design, development, and delivery that meet the needs of the large rural market segment.
The PMRC has also noted the need to upscale rural finance saying the government needs to deal with the prohibitively high costs of offering conventional, branch-based services in remote rural areas by promoting creative thinking and innovation in both financial products and delivery of those products.
Executive Director Bernadette Zulu said the capacity buildings needs to be done among banks and other financial service providers on how to use non-traditional forms of security/collateral with reference to the Movable Property Security Interest Act.
Mrs. Zulu said the Central Bank needs to urgently develop Agency Banking regulations to guide and accelerate agency banking in under-served rural areas and consequently increase the agency banking share of transaction volume by financial agents.
She said the Development Bank of Zambia needs to play an active role as
an apex financial institution in providing finances to microfinance institutions for onward lending to rural areas as espoused in the Rural Finance Policy and Strategy and Rural Finance Expansion Programme (RUFEP) program design.
Mrs. Zulu added that the government and Zambia Agriculture Commodity Exchange needs to put in measures that guarantee smallholder farmers’ active participation in the agriculture commodity exchange as opposed to a scenario where majority of farmers having access to agriculture commodity exchange are well-established farmers.
She added that the pensions and Insurance Authority will also need to upscale its efforts in ensuring that the necessary micro-insurance guidelines principles are promptly put in place to promote growth of insurance uptake in rural areas adding that legislation needs to be amended to accommodate licensing of micro-insurers and the need to open up the distribution space.
“Following the enactment of Movable Property Security Interest(MPSI) Act in 2016, Patents and Companies Registration Agency and other stakeholders need to increase sensitization in rural communities on the available options through MPSI Act regarding use of a movables sets as collateral to access finance. Zambia Statistics Agency needs to include “financial inclusion variables” in its routine national surveys to be able to measure financial inclusion statistics as opposed to the country relying on private sector sanctioned surveys to measure financial inclusion”, she said.
She said all the complaints specifically relating to inconsistencies with the Weather Insurance Index payouts where some farmers receive payouts while others do not but residing in the same geographical area affected by the drought also need to be dealt with and Enhanced confidence in Weather Insurance Index to enhance uptake of other in micro-insurance products for the farmers.
Mrs. Zulu some of the key activities during the Financial Literacy Week need to run for the rest of the year and priority should be given to rural areas with lower levels of financial inclusion.