African Prospects
Pushing the frontier towards financial inclusion
Ernest Addison
Governor, Bank of Ghana #5: Improve the quality of life for the people of Africa
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igital technology holds enormous potential for removing constraints to accessing financial services for millions of the unbanked and underserved in Sub-Saharan African. Notable among the initiatives to expand access are regulatory reforms, unique identification systems, safety net measures, consumer protection and recourse mechanisms, and permission to non-bank entities to partner with banks to extend delivery. These measures are set to boost supply of tailor-made services.
Financial Inclusion in Nigeria, Kenya and Mozambique Initiatives for financial inclusion show a high degree of common approaches, reflecting similar developmental challenges. African countries such as Nigeria, Kenya and Mozambique are at different levels of programmes targeted at financial inclusion, with mobile money the preferred delivery tool. In Nigeria, for instance, efforts are underpinned by the National Financial Inclusion Strategy, launched in October 2012. The Central Bank of Nigeria then established a Financial Inclusion Secretariat supported by
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thematic working groups to facilitate implementation. As part of regulatory measures, the central bank introduced a Bank Verification Number, which is a unique biometric identification of customers for all banking transactions, addressing a major constraint to access and heavily reducing identity fraud.In addition, approval was given to Etisalat, Glo, Interswitch Financial Inclusion Services and Innovectives to provide agent network services as “super agents” to promote access. Products for financial inclusion have received a boost with issuance of agent banking guidelines, micro-pensions and micro-insurance guidelines. Kenya has been at the forefront of financial inclusion and continues to implement new projects. In 2012, the Kenya Deposit Insurance Corporation was established to enhance confidence in the financial system. During the half decade of its existence, it has handled highprofile bank failures and prevented potential confidence crises. The National Payment System Regulation was issued in 2014 to consolidate and strengthen payment and financial inclusion policy initiatives.
African tribal necklaces The regulations complement the Payment System Act 2011 with the objective of providing a sound legal basis for executing the financial inclusion agenda. More recently, Kenya has introduced an innovative prepaid card named Huduma, designed to meet the particular needs of the unbanked and underserved. The product is the outcome of MasterCard’s collaboration with banks and is well served by a network of centres, including bank branches. Derivative products such as M-Shwari (a bank account linked to a mobile money account), M-Kesho (a digital savings product) and M-Kopa (a credit system that enables the
excluded acquire solar energy system on credit) have been developed on the famed M-Pesa platform.
Ghana Steps Up Financial Inclusion through Regulatory Reforms and Mobile Money
In Mozambique, the National Financial Inclusion Strategy 20162022 was launched to broaden access to financial services and explore economies of scale for transaction costs. The government has declared its intention to unify electronic payment networks.
The Bank of Ghana is at the forefront of transforming the financial sector through extensive institutional and regulatory reforms. Alongside these, the restructuring process consolidated growth in the financial services industry with diversified and innovative products. Yet Ghana still has a large unbanked population and envisions broadening the scope of financial services to cover the informal sector, too.
The Bank of Mozambique has recently updated the terms for linking, to one national network, the internal operations management systems of credit institutions and financial companies.
This set the stage for the next wave of reforms to strengthen regulation and
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