Bank of Zambia and UNCDF Release the 2019 State of the Digital Financial Services Industry Report

  • December 01, 2020

  • Lusaka Zambia

Over 6,500,000 DFS accounts active on a 90-day basis, an increase from 4,345,858 in December 2018.

The Bank of Zambia (BoZ) and the UN Capital Development Fund (UNCDF) are pleased to release the 2019 State of the Digital Financial Services Industry Report.

Based on a survey administered to 21 digital finance providers, the report analyzes the overall performance of the digital financial services (DFS) sector and the market trends in 2019.

Zambia’s DFS industry has grown steadily since 2014. Data from the 2019 report indicates that:

  • Over 6,500,000 DFS accounts active on a 90-day basis, an increase from 4,345,858 in December 2018.
  • An increase in customer activity from 26% in December 2018 to 39% in December 2019.
  • Over 90,000 active agents points, an increase from 46,781 in 2018.
  • A decrease in average value transacted by agents to K93,419 ($6,750) from K124,689 ($9,824) in 2018.

The increase in customer activity is a significant improvement from the previous year. According to the providers, some of the tactics employed to increase customer activity on DFS accounts included:

  • Offering products and services tailored to address the needs of specific customer segments;
  • Reactivating inactive customers by increasing customer education efforts, and re-introducing product offerings;
  • Using data analytics to better understand customer behaviours or usage trends.

To further increase customer activity, the market needs to continue building use cases that enable customers to transact frequently. The Zambian DFS market can be credited with launching partnerships that have led to the development of innovative products and services for customers. For example, banks and mobile network operators (MNOs) have partnered to increase uptake of services such as bank to wallet and wallet to bank transfers. Third-party service providers have also increased the number of integrations with both banks and electronic money providers to enable an increase in the uptake of digital payments for goods and services.

FinTech companies and other micro, small and medium enterprises (MSMEs) provided a channel through which Zambia’s DFS providers could reach and meet the needs of Zambians, especially those in rural areas. It is reported in this year’s State of the Industry Report, based on Zambia Information and Communications Technology Authority (ZICTA) figures, that mobile phone penetration rate (number of phones per 100 people) is 99.1 with a national network geographic coverage of 87 percent. These figures illustrate the potential to offer digital services to more people in remote areas, thus creating more opportunities for those communities to grow and develop, and enable more Zambians to effectively participate in the digital economy.

While the market saw growth due to DFS providers’ remarkable efforts, businesses were impacted by factors beyond their control. In March 2020, Zambia recorded its first cases of Coronavirus. The BoZ encouraged the general public to reduce the use of cash in order to reduce person to person contact. The BoZ and the DFS providers took measures to increase use of digital channels and this directive fast-tracked their plans to further digitize their financial activities.

At the time of the survey in April 2020, 84 percent of DFS providers reported that they were confident that their businesses would remain commercially viable, which is an improvement from 2018 when 61 percent of providers said their businesses could generate enough revenue to cover operation costs. This assessment was done before the respondents had felt the real impact of the Covid-19 pandemic. The actual impact of the Covid-19 pandemic on the DFS industry will be further analyzed as more provider and market data becomes available.

“While there has been an increase in customer adoption, there is an evident drop in liquidity within the agent network that signals a loss of quality of the agent network and a decreased profitability in agency business. The DFS industry should pay immediate attention to this, and focus on rebuilding the quality of the agent network, with improving the spread of services beyond the urban regions.

Whereas there is growth in the adoption of DFS and an increase in usage rates, there is still a gap in second generation products beyond person-to-person (P2P) transfers and airtime purchases. This offers industry players an opportunity to innovate for a purposeful bouquet of financial products that meet the needs of different categories of customers. Leveraging and linking the well-developed existing digital rails to key sectors such as education, health, governance, and agriculture will help ensure that no Zambian is left behind in this digital era. More and better second-generation products accelerate the need to develop the FinTech ecosystem while fostering partnerships, especially on shared digital infrastructure,” said Isaac Holly, UNCDF Country Lead for Zambia.

Lazarous Kamanga, Director of Banking, Currency and Payment Systems at Bank of Zambia said, “In recent years, the DFS landscape in Zambia has changed dramatically from the use of digital channels to deliver payment and financial services to the majority of commercial banks developing and deploying mobile applications for customers to access financial services, and e-money issuers using mobile phones to offer financial services. From this year’s State of the Digital Financial Services Industry Report, it can clearly be demonstrated that there is great potential in Zambia to have more people financially included through digital channels and ultimately in the digital economy. Further, we also wish to highlight that one area where COVID-19 pandemic has had a positive impact is in the retail payment system. In our market, we have seen the values processed through the digital channels increase significantly in 2020. In the face of the pandemic the BoZ, in collaboration with the banks and the DFS providers and mobile network operators (MNOs), took measures to encourage the use of DFS to reduce the use of cash and person-to-person contact. It is our expectation that next year’s State of the Digital Financial Services Industry Report will bring out greater insights and even higher growth in DFS in Zambia.”

Read the State of the Digital Financial Services Industry Report here.

For more information regarding BoZ’s programs and activities please contact the Public Relations Department on Email: or visit the Bank of Zambia website at: