Washington — Major new trends and innovations in digital financial services are opening up the possibility of significantly expanding financial inclusion in Africa, according to a new study released today by IFC, a member of the World Bank Group, and The MasterCard Foundation. The study, In The Fast Lane: Innovations in Digital Financial Services, highlights advances in distribution infrastructure, back-office processes, and product development.
Financial inclusion has made remarkable strides in several African countries in the last few years on the back of mobile technology and new business models for the distribution of financial services. In Tanzania, for example, the rate of access to formal financial services has increased from 16.4 percent to 57.8 percent in just four years, demonstrating the dramatic impact of recent innovations.
Many of the new innovations surveyed in the study further enhance and improve existing mobile money infrastructure. The study also points, however, to innovations that build on the existing system to supply services such as microinsurance, pay-as-you-go solar power or drinking water, and text books on demand.
Greta Bull, head of IFC's micro-retail advisory services in Sub-Saharan Africa and one of the co-authors of the study, said, "Digital financial services infrastructure not only enables the participation of low-income people in the formal financial sector for the first time, but also provides ample business opportunities for African and international companies to supply services that can improve peoples' lives."
New innovations also have direct applicability to business activities on the continent. Mobile applications, "apps", make it possible, for example, for small-scale farmers to easily group together to collectively bargain for lower prices of inputs.
Ann Miles, Director of Financial Inclusion at The MasterCard Foundation, said, "New innovations play an important role in promoting financial inclusion for all, and ultimately for economic growth, shared prosperity, and poverty reduction. With this study, we aim to make the industry and the public aware of the possibilities and opportunities that are out there."
SOURCE International Finance Corporation (IFC)