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The role of NGOs in financial inclusion

Last week’s article was on financial inclusion predictions for 2016. I must admit that it ignited some debate on what can be done and what seems to be fiction. The good thing about predictions however, is we can always look back at the end of the year and assess those predictions against actual figures. So, let’s wait and see.

by Munyaradzi Nyakwawa

There are some who felt some sectors of the economy were not fully covered in the article, yet there is a lot that can happen in those sectors in 2016, top of the list are the non-governmental organisations (NGOs). This article will look at this sector and the potential that lies in the NGO sector. It will also look at the potential transaction that will spur financial inclusion in this country.


It has been predicted by the Met Office that Zimbabwe will get normal to below normal rainfall this season. Below normal is what we have received so far, thus all indicators are pointing to a possible drought. Such news alone will not only trigger government spending toward grain importation, but it is also a distress call to NGOs. NGOs have always provided humanitarian assistance.

To date many NGOs still use cash handouts and vouchers for humanitarian assistance. It has been like this since 2009 and the reason has always been due to limited outreach of the financial services sector. A lot has changed since 2009. We have had more bank closures but we have also had mobile money as a success story. The Zimbabwean model of mobile money has been studied by other countries with the view of copying it.

Donor interventions are aimed at promoting livelihood development and to complement government efforts in early recovery processes. It is, however, worrying to note that with all the success stories, it is highly likely that if there is need for humanitarian assistance, majority of the donor funds will be distributed as cash or vouchers.

There is an underlying belief in the humanitarian sector that, in an emergency, cash transfers and vouchers are the appropriate and effective tools to support vulnerable groups. The cash transfers can either be conditional or unconditional.

2016 is the year in which the NGOs will realise the benefits of mobile money to the beneficiary, to the NGO, to the economy and to our own sustainable development goals. Cash handouts without education is like giving a man a fish instead of teaching him how to fish. In 2016 NGOs will take this opportunity, albeit in difficult circumstances to engage communities and play their role to eliminate financial exclusion.

How do NGOs assist in eliminating exclusion?
It is a fact that NGOs in Zimbabwe often have broader development goals than simply reducing financial exclusion. However, if their goals can be achieved at the same time as other development goals, NGOs will be happy to be reducing exclusion. To reduce financial exclusion statistics in 2016 NGOs will need to partner the private sector. NGOs spend more time with the communities and have the local knowledge component, which the private sector may not have. This is critical in making financial inclusion a success.

In West Africa such partnerships have been a success. Visa and CARE international started a village savings club model where they took the village cashbox and worked with private partners to place the money into formalised accounts. This led to individuals also opening accounts of their own, thus reducing exclusion.

Majority of Zimbabweans are members at least one a merry-go-round referred to as “maround” or “ukuholisana”, otherwise known as rotating savings and credit association (RoSCA). Some are members of savings clubs and burial societies. Most of these groups are formed with the assistance or with the encouragement of NGOs. This is the year in which NGOs will educate beneficiaries and communities on financial literacy and financial independence, thus reducing financial exclusion.

In 2016 NGOs will help reduce financial exclusion by paying out, “cash pay-outs” through mobile money accounts. Spare a thought for a woman in the rural area who used to receive their unconditional pay-out in cash and all of it was spirited away by the husband. When paid through mobile money, there is a high possibility that she will have some degree of control. This enhances financial inclusion for women.

Many a time I have seen women taking part in the food-for-work and any other conditional cash pay-out programmes, while the men are busy guzzling beer. Such men will only feature on the day of payment to take away the cash from the hardworking women. Mobile money is a cure to all these ills and 2016 is a year in which NGOs will partner with private sector to disburse humanitarian funds.

Vouchers have always been popular during droughts for food handouts. Mobile money can also help in this regard. There is an option within mobile money where beneficiaries can actually collect their allocation as food handouts without having to travel long distances. There are many reasons why NGOs would switch to mobile money for disbursements. Some reasons are for financial inclusion purposes and some may not be. Dan Kleinbaum states that some reasons are not purely for financial inclusion, though financial inclusion is of benefit in the long run.

One big reason why NGOs will move to mobile as observed by Dan is, transparency; “Cash management issues are often systemic and might be swept under the rug to avoid exposing how big they have become. There is a strong incentive to conceal losses due to cash”.
Mobile money eliminates corruption. Dan states that those who are benefiting from cash-based systems are likely to protest adamantly against a transition to more transparent payment platforms. In 2016 no NGO would want to be painted as promoting corruption and thus, humanitarian disbursements will be through mobile money.

Mobile money is secure, efficient, convenient and flexible thus NGOs will find its use to be more beneficial. 2016 is the turning point to have NGOs audit rating improve in order to gain the trust of the donor community.

Munyaradzi Nyakwawa is Digital Financial Services Consultant and Financial Inclusion analyst, can be reached on or on LinkedIn

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