Exclusion of Informal Sector Enterprises from Banking Services in Zimbabwe: Case of Informal Sector Entrepreneurs in Harare

Author's Name: Tavonga Njaya
Subject Area: Social Science and Humanities
Subject Economics
Section Research Paper


Financial exclusion; informal sector; banking services; informal sector enterprise


The study investigated the reasons for the exclusion of informal sector enterprises from the banking system. Data collection techniques included observations, in-depth interviews and document reviews. Using thematic analysis, the study explored the accounts given in in-depth interviews by 22 informal sector entrepreneurs at five places (or business clusters) in Harare. Purposive sampling was used to select registered informal sector enterprises in the following categories: commuter omnibus operators; driving schools; bottle stores; hairdressing salons; supermarkets and cottage industry. The study found that there was insignificant recourse to banking services by the informal sector enterprises in Harare. That is, only 9.09 percent of the interviewed informal sector entrepreneurs legitimately and directly interacted with the banks, although incomprehensibly, an additional 4.55 percent did so indirectly (generally through personal accounts of proprietors or related parties). The findings demonstrated that very few informal sector entrepreneurs banked their revenues or applied for funding from the banks. A small group, however, had either been refused access to financial products or made a conscious decision not to use them. Although, a majority of the informal sector entrepreneurs did not have access to banking services, they had embraced mobile money which provided them with convenient and prompt financial transactions at lower costs. There were numerous other concerns which demotivated informal sector entrepreneurs from using banking services such as exorbitant bank charges, restrictive requirements to open bank transaction accounts, lack of confidence in the banking system and reluctance to pay taxes.

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