Migrants and access to financial services : exploring alternative financial services available to Zimbabwean migrants who have no access to formal financial services in South Africa

Abstract

This study explores the issue of migrants and their access to financial services. It focuses on Zimbabwean migrants in South Africa and the alternative financial services available to those who do not have access to formal financial services. Most Zimbabwean migrants in South Africa are economic migrants who migrated with the intensions of utilising the better economic opportunities available in South Africa. Even though Zimbabwe has a long history of migration to South Africa the economic crises in the post 2000 error has triggered a huge increase in the ‘flow’1 of the number of migrants into South Africa. The demographic profile of the migrants has changed overtime from mainly male skilled migrants to including both male and females who are skilled professionals, semi-skilled and unskilled workers. They all have one thing in common which is the search for better economic opportunities to improve and maintain a good quality of life. Financial services are an important aspect in them achieving their goals upon migration. These services are crucial in maintaining a good life, as they need them to perform transactions such as paying bills, credit, remittances and saving. However due to their legal status and other challenges such as regulations, costs, trust, location, knowledge and product design many Zimbabwean migrants are excluded from the mainstream financial sector. This forces them to rely on alternative services provided in the informal sector. Several efforts and mechanisms go into making use of these including relying on one’s social networks and relatives. They are not only a source of information but can provide a needed service themselves or access to it. These alternative financial services are well suited for these financially excluded migrants due to their accessibility and the minimum requirements and regulation in the sector. However, this does not mean that they are perfect as migrants do face challenges when making use of these services, but have no choice due to their desperate situation. The study pays great attention to the utilisation of these alternative services and the challenges that migrants face when making use of them and the solutions adopted if there are any. The study concludes that adjustments in migration policy need to be by introducing a new stable project to replace ZSP. This should enable migrants to easily renew their permits and deal with the issue of uncertainty. Additionally, those migrants that have been under the ZSP project that are past the qualification period for permanent residence should be granted their permanent residence. With regards to the financial sector an easing of requirements such as credit histories should be made to allow those with valid documents such as passports to access services in the mainstream sector. It is important to note that the existence of an informal financial sector is not only a good market opportunity for those in the mainstream financial sector, but it is also a great contribution to the South African economy. Thus, it is worthwhile including these financially excluded migrants into the mainstream financial sector as it not only benefits the migrants but also benefits the country.