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| Digital Senegal for Inclusive Growth
BOX 3.5
Examples of direct public support for the modernization of financial sector market players The state can play a driving role in the modernization of market players providing financial services. It could set up matching grants (or another form of financial assistance) to do the following: • Modernize the firms’ accounting ecosystems: Technology is changing the way bookkeeping/ accounting activities are conducted worldwide. New forms of accounting include (a) the use of mobile to scan/send invoices (clients and providers), (b) the use of remote data entry centers, (c) automated connection to bank accounts (to regularly update firms’ cash flows and expended bank account balances), and (d) the use of all these data to enrich firms’ credit scoring/rating and further expand credit. Senegal could reform its “Centres de Gestion Agrées” (light public accounting structures) by embracing these new technological trends and providing technical assistance and financial support for firms to adopt and use these DT solutions. • Help create a regional crowdfunding platform, sponsored by the regional stock exchange
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and supported by the existing credit enabling institutions such as ADEPME, DER, and so on. A presentation of the concept was made by the World Bank to Senegal and Côte d’Ivoire.a Accelerate the adoption of USSD codes by financial service providers (mainly microfinance companies and fintech companies). An analytical work conducted by the World Bank in 2019 shows that, out of 32 requests for USSD codes, only one was implemented in Senegal.b Stimulate the expansion of networks of financial service agents in low-density areas by setting up a public-private dialogue aiming at defining a viable business model for cash-in/cash-out agents in rural areas.c Help microfinance companies acquire a Digital Core Banking System and enable them to catch up on their technological gap (e-wallets, remote account opening, e-credit, connectivity to the regional interoperable payment systems, and so on).d Incentives for the use of payment terminals at merchants (several options could be considered: tax reduction, lottery, and so on).
a. It is included as a background note to this report. See Gonnet 2020, appendix A. b. The Use of USSD Codes in the WAEMU, World Bank, 2019. c. See also Support to Digital Connectivity and Transformation in Senegal (P171740). d. Digital Core Banking Systems (D-CBS) are a new generation of CBS allowing the full integration of traditional management information systems with modern technologies (smartphones, GPS, USSD, internet, 3G, blockchain), new products (lending based on e-rating) and new channels of distribution (agent banking, subagent banking).
the supervision of the Central Bank of West African States (BCEAO) and by adopting international best practices of corporate governance. Second, the interest rate subsidy policy is wanting. There is a policy of subsidizing interest rates mainly in the rural/agricultural sectors. However, this policy has two major problems: the subsidized rates are poorly targeted (they indiscriminately benefit borrowers, that is, without income level conditions) and are distributed exclusively by a state bank although it would be more efficient to authorize their distribution by other banks and microfinance companies. Third, the government should consider creating an SME financing mechanism to support high-growth SMEs. Finally, there is a need to design and implement a public policy to support the financing of start-ups. Pre-seed and seed types of funds are rarely 100 percent private initiatives worldwide. An intervention of the government in this segment would be welcome. The creation of a public-private start-up fund should be fast-tracked.
