How innovation is driving financial inclusion in Africa

By Raghu Malhotra

Disruption is a process. Over the last few years, Africa has demonstrated its ability to pioneer payment solutions that have the power to effect large-scale and pervasive change that drives inclusive growth. It didn’t happen overnight – through concerted efforts and committed partnerships between the public and private sectors, numerous African countries have been able to introduce more accessible digital financial tools that facilitate greater levels of inclusion and economic involvement. Mobile money applications having been (and still is) one of the most successful drivers of financial inclusion on the continent. Digital finance solutions have the capacity to lower both operating costs as well as the barriers to access formal financial infrastructure.

Africa is a beautiful case study in and of itself, especially when you consider the significant ground the continent had to cover to keep up with global developments. According to the World Bank’s Global Findex financial inclusion data, 34.2 percent of adults in Sub-Saharan Africa have a bank account – nearly half of the global average of 62 percent. However, evaluating the same subset of the population reveals that 45 percent of these individuals have a mobile money account, compared to the rest of the world, coming in at 2 percent.

As developers of safe, secure and convenient mobile payment solutions, it is heartening to see the role that digital and mobile can play in this space – and how many governments, businesses, financial institutions and innovators have taken up the challenge to harness the immeasurable potential of digital finance. But again, disruption is a process. It’s a long-term game. Much like Africa has achieved the impressive milestones it has in a few short decades, innovators in this space have to be in it for the long haul. More importantly, they have to be connected to their customers.

Mastercard has made a long-term commitment to Africa. We want to connect 30-million of its denizens to the formal financial infrastructure in their respective markets. We don’t do this in isolation, we do this in partnership with private organisations, NGOs and governments alike. It is only through continuous partnership and innovation that effective solutions can be created and rolled out at scale. Mastercard recognises this and strives to work with trusted partners in the public and private sectors in order to conceptualise and implement tools that empower Africans in a real and measurable way.

A particularly important example of this kind of partnership in innovation was the agreement signed between Mastercard and the Rwanda Development Board at last year’s WEF Africa meeting in Kigali. The agreement focused on the digitisation of government services, specifically in the areas of school fees and national healthcare claim payments, an online payment gateway for RwandaOnline, an interoperable mobile banking platform and the management of cross-border spending.

Because of the success achieved in providing an online payment gateway for RwandaOnline – called Irembo – Mastercard and the Rwandan government have extended their partnership in order to bring greater numbers of the country’s citizens into the financial mainstream by making how they receive and make payments to and from the government more simple and secure. The implementation of this solution is a major driver of the government’s Vision 2020 strategy, which aims to build a cashless society where at least 90 percent of the population are financially included.

It’s not only in Rwanda that real and useful solutions are being introduced, though. Innovation is put into action every day across the continent, helping more unbanked and underserved Africans in a meaningful way. Disruption is, and always will be, a process.

(Raghu Malhotra is Mastercard’s President for Middle East and Africa).


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