How effective is Zambia’s cashless policy?

Zambia, like many other countries, is on a journey to reduce its reliance on cash transactions and move towards a cashless society. While the transition poses challenges, it also presents opportunities for financial institutions to innovate and collaborate with regulatory authorities to drive financial inclusion. Tola Adebayo, the Head of digital banking at UBA Zambia, sheds light on the progress and the way forward in an exclusive interview with CNBC Africa. Adebayo emphasizes the importance of accessibility and trust in the banking sector. He highlights the need for individuals to have easy access to their funds anytime, anywhere, without the limitations of traditional cash-based transactions. In a bid to drive the transition from cash to digital transactions, banks in Zambia are spearheading innovative products and solutions. One key initiative is the promotion of digital banking, which allows customers to access their accounts and complete transactions through their mobile phones. Adebayo stresses the importance of ensuring that customers have round-the-clock access to their funds, thus cementing the concept of a '24.7 active bank'. By leveraging technology and tailored products, financial institutions aim to instill trust and encourage individuals, especially in the informal sector, to embrace digital financial services. However, the shift towards digital banking faces obstacles, particularly in gaining the trust and acceptance of the general population. Adebayo acknowledges the challenges and emphasizes the crucial role of education and awareness in sensitizing the public about the benefits of digital financial services. The government of Zambia and the Bank of Zambia have shown strong support for the transition, aiding in the gradual acceptance and adoption of digital solutions. Central to the discussion is the role of regulatory authorities, such as the Bank of Zambia, in facilitating the acceptance of new players and innovative products in the financial sector. Adebayo commends the bank for its understanding and collaboration with financial institutions, noting the importance of compliance with regulations while fostering innovation. The harmonious relationship between regulators and financial institutions is seen as pivotal in transitioning Zambia from a cash-dependent society to a more digitalized economy. When posed with the question of whether regulation should precede or follow innovation, Adebayo emphasizes the need for a symbiotic relationship between regulators and fintech companies. Both entities must collaborate to bridge the gap between innovation and regulation, ensuring that new products and services meet regulatory standards while catering to the evolving needs of consumers. Adebayo expresses openness to partnerships and collaborations with fintech firms to develop innovative solutions tailored to different sectors of the economy, ultimately enhancing customer experience and financial inclusion. In conclusion, the journey towards a cashless Zambia necessitates a collective effort from all stakeholders, including government bodies, financial institutions, and fintech companies. By fostering innovation, building trust, and enhancing financial education, Zambia can pave the way for a more inclusive and digitally-driven financial landscape. The evolution towards a cash-light society requires collaboration, adaptability, and a shared commitment to driving positive change in the country's financial ecosystem.