Abstract
The advent of mobile money innovations has given people in rural areas, informal settlements and other poor communities an opportunity to participate in Zimbabwe's mainstream financial economy. However, the technology-driven money services have presented some challenges to the traditional banking sector in general and the regulation of financial services in particular. Firstly, most mobile money services are products of telecommunication corporations, which are not banks. Telecommunication companies use their network reach to provide mobile money services via mobile devices at a cheaper cost than banks across the country in Zimbabwe. As such, banks face unprecedented competition from telecommunications companies that are venturing into financial services. It also appears that prudential regulation of banks cannot keep up with the fast pace at which technological innovations are developing and this has created a disjuncture between the regulation and the use of technological innovations to promote financial inclusion in Zimbabwe. The Banking Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act [Chapter 22:15] 5 of 1999 and the National Payment Systems Act [Chapter 24:23] 21 of 2001 have a limited scope in terms of the regulation of mobile money services in Zimbabwe. The Ministry of Finance and Economic Development launched the National Financial Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial inclusion of the poor, unbanked and low-income earners in Zimbabwe. However, the NFIS appears to push more for bank-led financial inclusion than it does for innovation-driven initiatives such as mobile money services. This article highlights the positive influence of mobile money services in improving financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. The article also seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy. It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe.
Highlights
The article seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy
It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe
Official figures further show that at the end of March 2020 the number of mobile phones subscribed to mobile money services stood at 7.6 million, having increased from the 7.3 million recorded in 2019.34 In this regard, the poor, unbanked and low-income earners in Zimbabwe are among millions of persons who have benefitted from this innovative technology and are using mobile phones to participate
Summary
The increasing use of innovative technology in society has led to the emergence of new and potentially disruptive financial products, such as mobile money, that are changing the terrain and regulation of the financial services sector in Zimbabwe. Technological advances have given rise to various financial services and the opening of doors for new role-players such as telecommunication corporates in a sector that was dominated by banks. Innovative technology refers to the use of new products in the information communication technologies (ICTs) such as mobile phone applications to provide cheap, quick and real-time financial services. Mobile money is one of many innovative digital financial products that form part of the Fourth Industrial Revolution and it is changing the structure and regulation of the financial markets in Zimbabwe. Mobile money makes it possible inter alia for the poor, unbanked and low-income earners to deposit, withdraw and transfer money, and pay bills using value stored on their subscriber identity module (SIM) cards inserted in mobile phone handsets or any other hand-held devices. Banks can provide their customers with mobile banking services by linking the customers' mobile phones to their bank accounts, allowing customers to access their. Onemoney and Telecash are accessible through the use of mobile phones and they have changed the way that the poor, unbanked and low-income earners access financial services and financial products in Zimbabwe and other developing countries.. The instant nature of mobile money transactions appears to be too fast for effective regulation and supervision of the financial sector in Zimbabwe.21 As a result, these innovative technologies have both positive and negative implications for consumers, financial service providers, financial sector regulation and the economy at large.. The authors argue that a new statute must be enacted to accommodate innovative technology that effectively regulates the financial sector to promote financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. Wash J L Tech & Arts 287; Kersop and Du Toit 2015 PELJ 1607; Sulieman and Salleh 2020 Journal of Critical Reviews 570. Act) s 6(1). Postal and Telecommunications Act [Chapter 12:05] 4 of 2000, as amended, ss 4, 59-65. Banking Act [Chapter 24:20] 9 of 1999 (the Banking Act) ss 5, 17, 45-52C
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