According to the FinScope Tanzania 2023 Zanzibar Report, financial inclusion in Zanzibar increased to 83% in 2023, up from a mere 45% in 2017. This improvement may be the result of increased mobile money uptake and wider improvements in the island's economic situation.
In the last five years, despite the pandemic outbreak and international economic turmoils, Zanzibar has made significant strides in financial inclusion as the government continues to create a friendly economic environment and promote it.
Financial Inclusion in Numbers
The improvement in financial inclusion can be largely attributed to the increase in the use of mobile money services, which more than doubled from 38% in 2017 to an impressive 78% in 2023.
Additionally, the number of people who report having a bank account rose to 25%, compared with 15% in 2017.
Unlike other financial services, the use of official insurance remains low: only 8% of people in Zanzibar have insurance. However, this number has increased from 5% in 2017.
The report stresses that these strides can be attributed to both government and private sector efforts to ensure increased access to formal financial services.
Particularly, the increased expansion of mobile money agents and the opening of multiple bank branches, agents, and ATMs have been observed in Pemba and within more remote locations in Unguja since the previous FinScope Tanzania 2017 survey.
The study also indicates that 89% of adults in Zanzibar live within a 5km radius of a financial access point.
The Income Dependency Issue
However, despite these advancements, a significant portion of Zanzibar's population remains dependent on others for income.
«The report demonstrates that the increase in the use of financial services through mobile phones has considerably contributed to the growth of financial inclusion in Zanzibar. Mobile network operators have improved their business systems and developed various innovative financial solutions», said The President of Zanzibar, Dr. Hussein Ali Mwinyi.
«However, there is still much work to be done to ensure that working-age people, especially women, can earn their own income in order to reduce dependency», he added.
A significant portion of individuals (21%) are not paid in cash for their work; they receive goods or services instead. Most of these individuals are women who depend on male household members. They receive groceries or other household items in lieu of cash, and this dependency does not provide a pathway towards financial inclusion, according to the report.
The study shows that despite the higher financial inclusion levels, a gender gap remains, as only 22% of women uptake bank services, while for men, the rate is 29%.
Informal networks are also still highly relevant when it comes to accessing credit. According to the FinScope report, friends and family remain the primary source of credit for 80% of the population in Zanzibar.
«Besides the overall improved access to formal financial services, there are still people who cannot access these services because they do not have national ID numbers or cards. According to this report, only 72% of the people in Zanzibar are holders of Zanzibar Residence Identity Cards (ZanIDs)», commented Zanzibar’s Minister of State, President’s Office - Finance and Planning, Dr. Saada Mkuya Salum.
Pension Services Utilization
The report also indicates that almost half (47%) of adults aged 55 years and below do not receive an old-age pension or retirement benefits.
More specifically, only 7% of the residents use pension services.
The FinScope report attributes this to a variety of reasons, including the Zanzibari culture that favors living in a multi-generational family setting, which guarantees support not only from children but also from younger household members during old age.
According to the report, “most formal insurance and pension schemes lack an Islamic window, which hinders their uptake due to cultural barriers. The Revolutionary Government of Zanzibar has introduced a government-supported retirement scheme for every elderly society member in Zanzibar, under which they receive funds every second month”.
