Paper
Recovery of the Financial Sector and Building Financial Inclusiveness
Building an inclusive financial system in Zimbabwe
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70 pages
This working paper evaluates the prospects for recovery of the financial sector and achievement of financial inclusion in Zimbabwe. It draws from international experience and best practices, and discusses policy options.
The paper presents an overview of the financial sector in Zimbabwe. It states that:
- Financial sector has not been responsive to the needs of the wider economy and lacks inclusiveness;
- About 70 percent of population remained unbanked at the end of 2006;
- Financial sector faced challenges due to hyperinflation and policy inconsistencies;
- Public lost confidence in the banking sector, impacting financial inclusiveness adversely;
- Price distortions emanating from controls became very severe after 2002.
Authorities in the country formalized dollarization in the face of severe price distortions, which presented new challenges. While it stabilized inflation, it has a profound impact on the banking sector where capital levels had been eroded by hyperinflation.
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