WHILE we appreciate that the Bank of Zambia compels commercial banks and other financial institutions to publish in newspapers fees and charges for their services, it is important for the Central Bank to monitor the implementation because of huge disparities among the financial institutions.
The Bank of Zambia should explain to the public the reason why some banking institutions are charging customers handling fees when at the end of the month, customers’ accounts are debited for holding an account.
It is important for the Central Bank to monitor how the financial sector is developing products so that customers accessing bank services stop feeling that they are not being short-changed.
But sadly in Zambia, the reality it that some financial institutions put up very attractive products without explaining the devil in the details.
It is because of the financial “devils” in the loan or service details that banking has become unattractive and discriminatory to the larger population which is outside the formal employment sector.
There are so many people in informal employment who operate outside the banking system because of the perceived or real danger of losing their money through unexplained bank product schemes.
Instead of doing business in the comfort of the banking sector, many informal businessmen, even when they handle thousands of kwacha, prefer a cash society.
This is not only problematic to the Bank of Zambia to properly monitor money in circulation but also makes it difficult for financial institution to understand the movement of money and which areas were participating in financial transactions.
This is dangerous for the economy as institutions such as the Zambia Revenue Authority become susceptible to tax evasion.
It is therefore important for financial managers to develop products that will encourage both the informal and formal employees and other business persons to open accounts with banks.
The mangers should design products that encourage both employees and businessmen to transact using the financial sector systems to avoid the carrying of hard cash in bags and pockets.
Sadly, out of the estimated population of 13 million people in Zambia, only about 800,000 are in formal employment and can reasonably be said to be using the banking system.
This is because formal employment managers demand that their workers receive their pay from banks and other financial systems.
But the complaint of being short-changed by banks among formal employees is not new as it is an everyday song.
As we have said earlier, the banks are largely to blame as they do not explain in details the reason for some deductions as their concentration is largely on attracting customers rather than cautioning them in accessing certain services.
In simple terms, our financial sector should invest in proper customer-education about their products and the devil inherent in the services and the loans so that even when fees and charges are imposed, a client would have little room to complain.
Doing this will certainly make banking attractive and an increase in customer base, comprising formal, informal employees and other business persons.
At the moment, it is difficult for the banks and other financial institutions to boast about how well they have treated the Zambian community.