Mccpowell Fombang , Gauda Maseko

Abstract

Empirical evidence indicates that well-functioning, healthy and competitive financial systems are an effective tool in spreading opportunity and fighting poverty through offering people a wide range of needs such as savings, credit, payment, and risk management services. Given the importance of financial inclusion, Zimbabwe launched the National Financial Inclusion Strategy 2016 to increase the level of financial inclusion to marginalized segments especially in informal sector. Despite these efforts, the informal sector which contributes over 60% of total output in Zimbabwe, still has challenges accessing credit and other financial services. The purpose of this study was to assess and understand the reasons behind the low levels of financial inclusion within the informal sector with an aim to identify any gaps that need to be addressed and making recommendations to policymakers regarding enhancing access to financial services in this sector. This study surveyed 150 informal sector traders using structured and open-ended questions. The findings show inaccessibility, lack of financial education, and product inappropriateness as some of the key barriers to financial inclusion. Despite such achievements, the strategy is not optimally effective due to cash constraints, policy and adoption inconsistencies amongst other challenges.