In the last decade, Zimbabwe’s financialsector survived the periods of hyperinflation and thecollapse of the national currency that led to the adoptionof a multi-currency system in early 2009. Consequently,financial sector activity in Zimbabwe has shrunk by morethan 50 percent in many segments. In 2015, the financialsector is dominated by the banking segment that is generallystable but faces major systemic challenges: low liquidity,low capitalization, high cost of funds with low domesticsavings and expensive external borrowing. High credit risksincrease the reluctance to lend. At the same time, thetechnology-driven segments are growing rapidly butregulatory gaps pose significant systemic and entity-levelrisks. In such circumstances, the Zimbabwe authoritiesrecognize the urgency of establishing a sound financialconsumer protection regime and promoting financial literacy.This World Bank’s diagnostic review was requested by theReserve Bank of Zimbabwe with support of the nationalgovernment and regulatory bodies. It provides analysis ofthe legal and regulatory framework in the banking, digitalfinancial services, non-bank credit institutions, insurance,securities, private pensions, and credit reporting segments.Four consumer focus groups were also conducted on financialcapability issues. Volume I of the Review summarizes the keyfindings and recommendations, and Volume II providescomparison with the Good Practices for Financial Consumer Protection.
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