THERE are vast opportunities to expand financial access for Zambians, and the competitive landscape suggests a potential for the Zambian market to set new benchmarks in Digital Financial Services (DFS) globally, the financial sector Deepening Zambia report has said.
According to the report, the current level of profitability in DFS is encouraging because Zambia is at a tipping point as only 14 percent of adults use mobile money, indicating a lot of room for growth.
It says the competitive market may entice agents to work with multiple providers, thus increasing their potential revenue stream and profits.
“The future could be very bright for DFS providers in Zambia. There are vast opportunities to expand financial access for Zambians, and the competitive landscape suggests a potential for the Zambian market to set new benchmarks in DFS globally.
“Financial services are ever more relevant to Zambians in the face of challenging financial circumstances,” read the report.
Zambian providers of financial services will need to revisit their strategies in order to entice more Zambians to utilize DFS products, educate them on DFS services, and thus effectively breed the demand agents’ need to earn more profits to set these new benchmarks.
The report however says it would be prudent for Zambian providers to understand the causes of low profitability among agents in order to avoid potential agent dormancy in the country.
The report says the Helix research indicates that low earnings could be a result of the poor commission structures given to agents for low-value transactions.
According to the report, while the number of transactions conducted was healthy, Zambian agents were not as profitable as their East African counterparts.
In fact, the report shows that profitability was among the lowest in the research countries.
“High agent profitability is often cited as one reason for the rapid growth of DFS in Tanzania. Agents in Zambia earn a median profit of USD$105 (PPP adjusted), compared with USD$195 in Uganda and USD$238 in Tanzania,” he said.