Financial inclusion: disrupted liquidity and redundancy of mobile money agents in Zimbabwe

Abstract

Mobile money agents (MMAs) are the pedestal of inclusive finance by bringing financial services closer to unbanked people by offering them capabilities to move from cash to electronic money and vice versa. This function is effective in an environment where hard cash is in uninterrupted circulation. The aim of this paper is to investigate implications of cash liquidity challenges in Zimbabwe to the development of financial inclusion through MMAs in a rural set-up. Phenomenological in-depth interviews were conducted with MMAs. Due to national liquidity challenges, MMAs ceased to receive cash float support, limiting their cash-in and cash-out services. Pure agents were adversely affected, while those who operate retail goods services reported increased goods sales through mobile money point-of-sale payments. Consumers are restricted to deal in electronic funds in the cashless economy making the cash-in and cash-out function of MMAs redundant. MMAs need support to sustain their operations and recoup invested capital in infrastructure. Risk management strategies, including the principal-agent contracts that minimize the exposure of MMAs to disruption of the service are important. MMAs could form an association to lobby financial regulators for support, negotiation with principals, market research, political power and active participation of agents in deepening financial inclusion. Perhaps pure MMAs could improve their economic sustainability by diversifying their businesses.