73% of Digital Financial Services accounts dormant, notes UNCDF

Around 73 per cent of registered Digital Financial Services (DFS) accounts in Zambia remain inactive despite a huge growth in the number of registered accounts, new data shows.

But Bank of Zambia (BoZ) deputy governor for operations Dr Bwalya Ng’andu says the DFS market is proving to be an effective tool for enhancing financial inclusion in the country.

According to new data availed in the 2018 State of the Zambian DFS Market Report, jointly-unveiled by the BoZ and United Nations Capital Development Fund (UNCDF), Thursday, only 4.3 million accounts within the DFS market are active out of a total of over 16.5 million registered accounts.

This means that around 73 per cent of registered DFS accounts in Zambia remain inactive despite huge growth in the digital financial services market.

DFS accounts in the country have largely been driven across three platforms namely: banks, Mobile Network Operators (MNOs) and Micro-Finance Institutions (MFIs), who operate and offer consumers various financial services, such as bill payments and talk time purchases, among others.

Unveiling the latest report findings, UNCDF regional technical specialist Nandini Harihareswara said that the large number of inactive users should worry companies on the need to improve customer services.

“While there is growth in the number of active accounts year-on-year, overall customer inactivity still remains an issue for providers with over 70 per cent of registered DFS accounts being inactive. This suggests that there is need for providers to: leverage data analytics for insights on customer behaviour and segments; increase consumer education efforts and customer incentives focused on driving usage,” Harihareswara told stakeholders gathered at Intercontinental Hotel.

According to the report’s findings, the Zambian DFS market continued to show positive growth across various indicators, with the number of active DFS accounts largely driven by significant growth reported by mobile money service providers.

And Dr Ng’andu noted that the DFS market was proving to be an effective tool for enhancing the financial inclusion agenda in the country.

“What this Report is telling us is that the provision of DFS is proving to be an effective tool for achieving the objectives of the financial inclusion agenda as noted from the positive results achieved thus far. Such technology-driven innovations are providing a pathway for uplifting the unbanked and under-served marginalised people across the developing world by providing them with a safe, cheap and convenient means of accessing formal financial services ranging from savings, payments and transfers to credit and insurance,” said Dr Ng’andu.

In 2014, the DFS industry in Zambia reportedly had a total of only 333,000 active adult DFS accounts, 2,730 active agents and seven providers.

But by the end of last year, the number of active adult DFS accounts had jumped to 4.3 million, with a total of 18 providers and 46,000 active agents.

The 2018 State of the Zambian DFS Market Report is the third successive annual report that attempts, as its major objective, to document and highlight growth and innovations taking place in the DFS market.

It presents information in a comprehensive and structured way so that it can be used as a tool for making pointed and evidence-based decisions.

The report also informs major players in the DFS space about global best practices on how to design customer-centric products, to manage better agent relationships and to formulate appropriate policies and regulations in order to create an environment that is conducive to improving wider access to financial services.

         

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