APS reports have been published on an annual basis since 2016 and are useful for tracking the growth of DFS in Zambia. This APS gives an indication of how financial services are reaching the various sectors of the population from the supply side and will complement the official Ministry of Finance demand-side FinScope Survey findings on financial inclusion rates in Zambia.

In 2019, UNCDF launched its new global strategy, ‘Leaving No One Behind in the Digital Era’, to support the development of an inclusive digital economy (IDE), which further supports an aspiration set out in the country’s broader ‘National Financial Inclusion Strategy (2017–2022)’. This APS highlights market developments and identifies current challenges and barriers that DFS providers face. It also provides an opportunity to reflect on the journey of the DFS market in Zambia while looking ahead.

The report contributes to the formulation and fine-tuning of evidence-based policies and strategies. Further, the APS indicators are necessary for monitoring progress in achieving the global Sustainable Development Goals around full and productive employment as well as decent work for all and partnerships, among others.

This APS was conducted in conjunction with the BoZ ‘Strategic Plan 2020–2023’, which focuses on two main areas: i) financial stability and ii) financial inclusion. The strategic initiatives under this plan include advancing financial inclusion in Zambia by leveraging DFS and partnerships with key stakeholder institutions.

The process for developing this report included gathering data, assessing the incentives of the providers in the Zambian digital finance context and surveying the insights of stakeholders. The content of this report is based on information gathered from May to August 2020 and represents data from December 2018 to December 2019.

This APS survey was conducted when the effects of the COVID-19 pandemic were being felt in all sectors and industries, but the collaboration and partnership with BoZ ensured that data was collected from the majority of providers who received the survey; in addition, the strong partnership ensured all the data was validated. Overall, the data indicates that the DFS industry in Zambia is growing, with an increase in the number of active accounts signifying a reduction in customer dormancy and a tremendous improvement in bank customer activity rates since 2016.

In 2019, providers improved product offerings to specific customers segments and increased levels of financial literacy education. Further, bonus incentives and increased investment in staff working in DFS helped to improve customer understanding, which consequently increased the adoption of services. All these initiatives contributed to an expanded growth in, and greater depth of, DFS products and services.

BoZ and UNCDF are collaboratively building a DFS data reporting and analytics platform, which will automate the data collection/ analysis process while providing updated and timely information to support and frame evidence-based policy decisions and guide market interventions. This system will allow for real-time visibility of data, enable users to view or access sex-disaggregated data and enable financial service providers to see their growth in the industry over shorter time-periods.

The new automated system will also change the way the APS survey is administered and how these reports will evolve in coming years. This welcome change also enables providers and other stakeholders to have better access to DFS data, allowing improved strategy development and decision-making.