Examination of the Savings Practices Drivers Among Zimbabweans

Abstract

Savings are part of the current income for use in the future or the accumulation of financial and non-financial assets and are mobilised by the financial sector which allocates them for productive use in the economy. The study examined the determinants of savings practices among Zimbabweans. A mixed approach was used to establish the drivers of savings among Zimbabweans. Both secondary (Bank deposits and liabilities) and primary data were employed for analysis and testing of hypotheses. A linear regression model was used to explain the savings practice among Zimbabweans and the determinants of savings. 200 depositors randomly selected from the ten provinces as well as 114 key informants were used in the investigation. Although the Zimbabwean majority across gender had a formal bank or mobile account, the predominant are savings for transactional purposes. Savings motivation was related to the selected banker although the provincial residence of accounts was independent to the savings practice. Zimbabwean savings culture has been affected by economic fundamentals, political factors and the credibility of the financial system. There was low financial literacy and depth of the financial system products and services. The savings costs were too high and there was low confidence in the financial system. This called for financial deepening and product development to meet the diverse population needs. This could be supported by broadening the scope of the financial institutions’ operating licences. A cost reduction and framework of rewarding savers as well as confidence restoration by providing guarantees against future losses was necessary. Monetary and fiscal policy reforms could also help long term savings.

Key terms: financial system, savings practice, bank deposits and liabilities, gross and net savings

DOI: 10.7176/DCS/10-8-04

Publication date:August 31^st 2020