DIGITAL finance has been hailed as a powerful tool that holds opportunities in the extension of basic services and financial inclusion across Africa.
Speaking at the Africa Financial Summit, Reserve Bank deputy governor Daniel Mminele said: “One can no longer talk about growth without making reference to the fourth industrial revolution and digital finance.”
Earlier this year, the World Bank highlighted digital finance as having the capacity to contribute to reaching the goal of universal access to financial services by 2020.
About 2-billion adults across the world do not have access to formal financial services. In sub-Saharan Africa, about 30% of the population has a bank account, a low figure when compared with emerging Asia’s 50%.
Financial inclusion in East Asia is close to 70%. In SA, 77% of the adult population has a bank account.
Organisations such as the Consultative Group to Assist the Poor (CGAP) are working with financial services providers to leverage payment infrastructure that is increasing in parts of Africa and offer other financial services. The aim, said CGAP’s Michel Hanouch, was to offer more advanced services, such as credit facilities.
Kenya has successfully transformed mobile banking services to reach beyond simple money-sending capability. Mobile wallets now allow people to save and transact via their phones.
The Commercial Bank of Africa noted that mobile wallet users tended to retain money in their wallet, thus using it as a savings facility.
Eric Muriuki, who heads the new business ventures division at the Commercial Bank of Africa, said clients used their wallets like they would a current account and they wanted to capitalise on that. “What we’re looking at now is how we extend financial inclusion beyond payments so that we’re not just facilitating a money-sending service,” he said.
Financial literacy was also vital in ensuring clients had a better understanding of financial products and the importance of healthy financial habits.
This allowed the bank to extend products beyond simple money transfers.