In my last post I was excited about having seen a couple of elephants from afar. I have now seen more elephants and from closer quarters than I ever thought would be advisable. Farmer’s Day makes a long weekend of the first weekend of August and a few of us headed down to a lovely riverside lodge in Lower Zambezi, a few hours’ drive southeast of Lusaka. While the girls I was with have lived in Zambia for years, I was full of wonder at every twitch of a hippo’s ear, as they sat observing us curiously from their pods. There were moments of slight trepidation as a large herd of young bull elephants prevented us getting back to camp for over an hour at the end of our walking safari. An early morning canoeing trip, with a half-way stop in Zimbabwe, was another highlight of the weekend, particularly when a couple of elephants chose to cross the stream right in front of us.
The reason for the public holiday on the Monday is the Agriculture and Commercial Show, an annual event held in Lusaka over the weekend, which involves exhibitors from all sectors of the economy and provides a good opportunity for networking. Government departments, civil society organisations and international businesses are also represented. I stopped by on Monday, the last day of the event, and found the Commercial Showgrounds packed with colourful stands, business people and families enjoying a day out. I was keen to pay a visit as it is an important event in the Zambian calendar and many of the Mobile Transactions team had worked hard setting up our stand. I hesitate to call it that because it turned out to be a very large building painted in our distinctive bright green and branded all over. Inside, there were staff members speaking to potential corporate clients about our payments services and one of our Champion Agents doing money transfers.
The week before, I attended the presentation of a government commissioned survey, conducted by Finscope, on financial inclusion. The conference was hosted by the Bank of Zambia and included representatives from Government Ministries, Parliament, the Bankers’ Association, financial sector businesses and the media. The survey is intended to provide policy makers with market information as they focus on financial inclusion as a poverty alleviation tool. Given that I spent last semester writing papers on Zambian development, I was very interested to see the Financial Sector Development Plan in action.
There seemed to be a general awareness that banks and financial products have to be relevant to people’s lives if the country, particularly the rural areas, is to be transformed. There is also an understanding that certain underlying barriers to financial access must be addressed, such as general financial literacy and access to standard KYC (Know Your Customer) requirements that are difficult to come by for many (such as proof of address). The presentation made clear the challenges that Zambia faces. A majority of people live in rural areas where most do not have access to safe drinking water, 1 in 5 do not have access to toilet facilities and more than 90% rely on wood and charcoal to cook. Most people have no more than primary education and own just basic assets such as agricultural hand tools.
I thought it was significant that in his opening remarks the Minister of Finance described the worrying situation in which many government employees find themselves when it comes to getting paid in rural areas - he described a teacher having to leave his classroom and walk for a couple of days to pick up his pay and then walk back. For example, Northern Province, which has a larger area than Greece and a population of around 1.5 million, has 9 ATM machines and 17 bank branches. Western Province is only slightly smaller and has 5 ATMs and 6 bank branches. In Zambia only 14% of people have bank accounts (less than this in rural areas), 9% rely on financial products from non-bank financial institutions (e.g. micro finance) while another 14% rely on informal financial products. This leaves 63% of the population financially excluded, which is in stark contrast with somewhere like Kenya where 33% of the population falls into this category.
These statistics suggest a clear role for mobile payment systems, micro-insurance as well as low-cost transaction and savings products and underline the importance of a regulatory framework that supports financial access by promoting a more risk based approach. Although less than 30% of the population in rural areas owns a mobile phone (the figure is 60% for urban areas), there are still many ways that businesses can have a social impact and help reduce risk in these areas. For example, Mobile Transactions works with a large cotton company that does ‘out grower’ schemes (it lends seeds and fertilizer to thousands of farmers at the start of the year and buys back the cotton at the end of the year, deducting the loan from the purchase price). Mobile Transactions has piloted a payments system for Dunavant that allows farmers to be paid more quickly and which should ultimately have an impact on their crop yield and the price at which they can purchase inputs.
Several people have asked me about the food in Zambia. The staple food is called Nshima and is made from ground maize (not dissimilar to Italian polenta) and can be eaten with some meat and sauce or a nice vegetable relish. The tricky bit is eating it in the right way by rolling bits up in your right hand and dipping it in the sauce without using up all the napkins at your table and having to ask the table next door for theirs (much to the amusement of those around you).