A new report titled Digital Access: The Future of Financial Inclusion notes that “Financial inclusion is one of Africa’s great success stories of this decade.”
The report, coming out of a partnership between the International Finance Corporation (IFC) and the Mastercard Foundation, also highlight challenges to be tackled for the region to reach universal financial access.
IFC and Mastercard Foundation executives “Financial inclusion is one of Africa’s great success stories of this decade. Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighborhoods where no bank had ever established a branch.”
The report noted some of the challenges that will have to be addressed to continue progress in financial inclusion. To expand financial services to the last mile will require investments in merchant and agent networks, and innovation along agricultural value chains. As well, financial service providers will need to develop and launch products that meet an increasingly nuanced demand from an even broader variety of users, such as entrepreneurs, merchants, smallholder farmers, youth and women.
The report confirms advancement noted elsewhere. Financial inclusion in Sub-Saharan Africa has increased dramatically over the past decade, from 23 percent in 2011 to 43 percent in 2017, according to recently released data from the World Bank Findex survey. Sub-Saharan Africa is the only region where the share of adults with a mobile money account exceeds 10 percent.
Mamie Kalonda, Chief Executive Officer of FINCA in the Democratic Republic of Congo, one of the client institutions of the Partnership for Financial Inclusion, said, “In the DRC, I expect digital financial services will grow even faster in the next five years. Almost all banks are going mobile.” She added, “It is important to reach the rural areas, because that is where people are poor.”
In the DRC, the use of mobile money services had reached 16 percent in 2017, helping to push the overall financial inclusion rate from 3.7 percent to 26 percent in the same period.
Riadh Naouar, Head of IFC’s Financial Institutions Group Advisory in Sub-Saharan Africa, said, “Looking ahead, we can see some interesting trends for the future. While East Africa has long been the star performer in terms of the evolution of digital financial services, West Africa is the new growth market. Not only in terms of reach, but also for innovation.”
“There is a need in the broader industry across the continent to shift to the next generation of digital products,” he added. “A broader, more multi-faceted market is asking for more sophisticated and relevant products beyond person-to-person payments. There are evident opportunities to develop digital banking, savings and credit products, as well as the digitization of value chain financing and merchant payments.”