High Bank Charges Stifle Financial Inclusion, Report Warns

The country’s high banking charges are choking financial inclusion and discouraging the majority of citizens particularly those in the informal sector from using formal financial services, a new report by the National Economic Consultative Forum (NECF) has revealed.

The study, which assessed the country’s financial inclusion infrastructure highlights steep banking costs as one of the major barriers undermining access to credit and savings.

On top of monthly account fees averaging US$5 local banks also impose a US$3 charge for every US$100 withdrawn.

“The cost structure of banking services significantly affects financial inclusion, particularly for the informal sector. In Zimbabwe, bank charges are relatively high, which, combined with a 3% mobile money transaction fee and 4% transaction fees for the informal sector, can discourage the use of formal banking services,” NECF noted.

The Forum also pointed to borrowing costs as a significant hurdle, with interest rates on loans averaging 12% a rate it said locks out small businesses and informal traders from accessing credit.

By comparison, South Africa offers lower banking costs, with monthly charges averaging US$3, mobile transaction fees at 2% and loan interest rates of around 7%.

NECF said such conditions foster a more inclusive financial system that serves both formal and informal players.

The report further observes that 67% of Zimbabwe’s population lives in rural areas where banking infrastructure is limited.

The country has a bank branch density of 4.5 per 100,000 adults, far below South Africa’s 9.8.

Although Zimbabwe boasts 90% mobile network coverage, which provides a foundation for mobile-based services, financial literacy levels remain low at 35%.

High mobile transaction costs and relatively low internet penetration at just 36% further restrict access to advanced digital banking.

With the informal sector making up 90% of Zimbabwe’s economy NECF warned that the current cost structures risk entrenching financial exclusion and stalling economic growth.

It urged policymakers to expand internet connectivity, reduce transaction charges and address infrastructure gaps in rural areas to unlock the benefits of financial inclusion.