The UN Capital Development Fund (UNCDF) launched MM4P in 2012 to ensure that the opportunities and benefits of digital finance would reach low-income people in difficult markets.
This initiative is in line with the third strategic objective of Bank of Zambia which is “to increase formal financial inclusion by 16% percentage points in order to contribute to enhanced living standards.” The providers for DFS provide first and second generation products such as airtime purchase and loan repayment respectively which is categorized in mobile network operators.
The DFS market in Zambia stands at 16.5 million DFS registered accounts, 478 agents per 100,000 adults, 46 million transactions processed by agents who have generated $589.9 million in value of their processed transactions which has resulted in an 89% growth in active DFS accounts. Moreover, the Zambian DFS market has carried on expanding positively across various indicators such as the active agent networks growth to meet the increasing demands of a growing active customer base.
However, the DFS providers have being faced with various challenges that include high client dormancy, management of the agent networks, developing viable business models to support expansion into rural areas and data analysis, reporting and usage for decision making. For instance, customer dormancy is high and a major missed opportunity to capture an existing market of customers that have already registered for the product (Annual Report, 2018).
Providers highlighted limited internal capacity to support sufficient data analysis and reporting hence limiting the ability for providers to test improved pricing and coming up with innovative products.