Digital
Access: The Future of Financial Inclusion
highlights the phenomenal success of digital financial services in Sub-Saharan
Africa and outlines the challenges still to be tackled to reach universal
financial access. It captures the experience and knowledge gained by IFC
and the Mastercard Foundation in supporting the growth of digital finance
in Africa under the joint Partnership
for Financial Inclusion since 2012.
Working together with 14 microfinance institutions, banks, mobile network
operators, and payments service providers across the continent, the joint
initiative has resulted in 7.2 million new digital financial services users
(a 250 percent increase from the baseline), 45,000 new banking agents,
and $300 million in monthly transactions.
“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,” noted IFC’s Chief Executive
Officer Philippe Le Houerou and Mastercard Foundation President and Chief
Executive Officer Reeta Roy in a joint foreword to the new report.
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.
“The Partnership for Financial Inclusion
has been an important actor in helping to drive financial inclusion in
Africa,” said Ruth Dueck-Mbeba, Senior Program Manager at the Mastercard
Foundation. “We’re proud of the work that our partner, IFC, has led over
the past six years. It has enabled millions of people to benefit from access
to financial services. More than that, the knowledge that we’ve gained
will lead to millions more people improving their lives and their communities
by being able to join the formal financial services sector.”
There is an emerging body of evidence on the
impact that digital financial inclusion can have on inclusive economic
growth and development. A study in the report shows that smallholder cocoa
farmers in Côte d’Ivoire who saved regularly were better able to feed
their families than those who did not save, irrespective of the farmers’
annual income. The same study also revealed that many smallholder cocoa
farmers felt ‘socially excluded’ by traditional banks but were generally
accepting of agent banking and digital services.
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.”
The report noted some of the challenges that
will have to be addressed to continue progress in financial inclusion.
For instance, 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.
For more information, please watch our videos
on joint IFC and Mastercard Foundation projects in Côte
d’Ivoire, Madagascar
and Zambia.
About the Partnership for Financial Inclusion
The Partnership for Financial Inclusion is
a $37.4 million joint initiative of IFC and the Mastercard Foundation to
expand microfinance and advance digital financial services in Sub-Saharan
Africa. It is also supported by the Bill & Melinda Gates Foundation
and the Development Bank of Austria, OeEB. For more information, visit
www.ifc.org/financialinclusionafrica
About IFC
IFC, a sister organization of the World Bank
and a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence to create markets and opportunities in the toughest areas
of the world. In FY17, we delivered a record $19.3 billion in long-term
financing for developing countries, leveraging the power of the private
sector to help end poverty and boost shared prosperity. For more information,
visit www.ifc.org
About the Mastercard Foundation
The Mastercard Foundation seeks a world where
everyone has the opportunity to learn and prosper. The Foundation’s work
is guided by its mission to advance learning and promote financial inclusion
for people living in poverty. One of the largest foundations in the world,
it works almost exclusively in Africa. It was created in 2006 by Mastercard
International and operates independently under the governance of its own
Board of Directors. The Foundation is based in Toronto, Canada. For more
information and to sign up for the Foundation’s newsletter, please visit
www.mastercardfdn.org.
Follow the Foundation at @MastercardFdn on Twitter.
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