PDP response to the RBZ Financial Inclusion Strategy

In any country where the majority of citizens are inadvertently excluded from access to affordable financial services, that country will be unable to maximise on its economic activity and can therefore not grow to its full potential.

The recently announced strategy on financial inclusion by The Reserve Bank Governor, John Mangudya, is therefore welcome and critical for economic recovery and the creation of an inclusive economy. The strategy has identified four pillars that need attention in order to enhance financial inclusion. These being innovation, literacy, consumer protection and micro finance.

These ideas sound well and good however, as far as PDP is concerned we need to appreciate that the major underlying reason why Zimbabweans would rather keep their money outside the formal banking system is simply because they have not regained the confidence lost in the formal banking system during the Gideon Gono era.

We are convinced as PDP that in many minds today in Zimbabwe, the historical pain of loss of bank deposits and valuable assets during the Gono era still looms larger than the perceived potential gain of putting money in the bank. Unfortunately this nightmare remains hidden deep in the psyche of many Zimbabweans and cannot be wished away.   In our view, no amount of innovation, financial literacy or consumer protection will change that fact in the short to medium term.

This lack of confidence is further exacerbated by inconsistent government economic policies, an illiquid money market and the fact that there is always suspicion that this government will one day and re-introduce the Zimbabwe dollar without warning. Simply put, Zimbabweans do not trust this government and its leadership when it comes to money matters.

If we then add the continuing unresolved leadership succession cacophony within ZANU (PF), the continuing farm invasions, the recent housing demolitions without recompense, the ensuing diamonds saga and many other government actions that are contrary to creating a stable macro-economic environment, we cannot expect confidence levels to increase whatsoever.

This is what we call systemic risk. The political and economic system in Zimbabwe is perceived as unstable, high risk, is unable to protect private property and is seen as having no respect for the rule of law. That is the crux of the matter.

As PDP our view is that until we address this perceived systemic risk and lack of confidence in this government and its policies, financial inclusion will remain a theoretical wish.

There is no doubt that it will only be  when we have in place a new ethical political leadership that respects the sacrosanct right of the protection by law of privately owned assets can we begin to expect our people to trust the banking system.

In our economic blue print termed Holistic Program for Economic Transformation or HOPE, creating a stable macro-economic environment and a well regulated financial services sector which builds confidence will be one of our key priorities. However this must be underpinned by consistent and well considered government policies that do not change at the whim of a sitting President.
Another Zimbabwe is possible!