Opportunities for Africa to Deepen Financial Inclusion and Development

 

When people can participate in the financial systems, they are better able to start and expand businesses, invest in their children's education, and absorb financial shocks.

Sub-Saharan Africa has a population with most lives staying at the economic downstream, and most likely underdeveloped. The financial inclusion gender gap and income gap persisting just like in other continents, though higher in Sub-Saharan Africa. World Population estimates based on the latest estimates released on June 21, 2017, by the United Nations, shows Africa continues as the second largest continent with a population of 1, 256, 268, 025 (16% of the population of the world) and by the end of January 2018, 40. 2% living in urban areas.

The continent has the highest fertility rate of 4. 7% (Oceania 2 . 4%, Asia 2 . 2%, Latin United states and Caribbean 2 . 1%, Northern America 1 . 9% as well as Europe 1 . 6%) compared to the other continents with a yearly population rate change (increase) of 2. 55% - the highest among all continents. Most of its people (59. 8%) have lived downstream (rural areas and villages) sometimes out of the mainstream economy. Policy targeting could be difficult in such scenarios, and identifying people who lack access to financial and economic inclusion comes with a huge financial cost by itself, though the benefit in doing so outweighs the cost in mere numbers and requires commitment from leaders and managers of the respective economies. Coupled with a universal phenomenon of non-perfect, untrusted, and in some cases non-existing data on the continent, that could make decision making imperfect and data unreliable, affecting plans, policies and the potencies to resolve stated challenges or improving the economic and social fibre of countries.

The struggles of the financially excluded come from barriers and reasons as access, social and cultural factors, income, education and many possible lists of others. Financial exclusion arguably is one of the reasons some economic policies lack potency to effectively target well on the citizenry with its results in persistent poverty and inequality. Lack of access to basic needs like an account either at the bank or mobile money could mean significant possibilities of opportunities untapped. Globally countries have realized the importance of achieving inclusive societies and supports efforts at increasing financial inclusion. Sub- Saharan Africa has made some strides over the years in financial and economic inclusion in this regard at individual country levels.

Efforts ongoing in Ghana include a commitment to promoting and also prioritizing financial inclusion. The country made specific and concrete promises to further advance financial inclusion under the ``Maya Declaration`` since 2012 and has an ambitious target of achieving 75% Universal monetary inclusiveness of its adult population by 2020. Ghana currently has 58% of its adult population having access to financial services and is also finalizing its National Financial Inclusion Strategy which will become the guiding document and reference for inclusive actions, stakeholder roles and responsibilities spelt out for all.

Kenya, however , has earned global recognition in leading the all others in the world in mobile money account penetration, and with twelve other sub-Saharan African Countries following, researchers show. The rate at which African countries are projecting innovation technology for digital financial inclusion is impressive. The country has made giant strides in its financial inclusion commitments, especially under the Maya Declaration.

There has been some paradigm shift in Information along with Communication Technology and its importance which is being considered as a factor of economic growth. ICT has the ability to provide services with minimal cost, improve innovation, and provide infrastructure for convenient and easy to use services, it can also provide a route to access many auxiliary financial services.

At the macro level, digital innovation influence economic development and economic policy effectiveness. The benefits ICT enabled mortgage services include the possible creation of employment- mobile money vendors, increases in revenue receipts of government, helps firms productivity (both private and public), assist in cost control and efficiencies, and Could contribute to rural development in addition to governance: Governance and revenue mobilization efforts, especially at city levels, can be enhanced through ICT which aids in overall improvement in corporate governance. Importantly, Innovation Technology can help in the deepening of financial inclusion either through access, usage, reducing risk and improving quality of services, thus, per formula for Financial Inclusion (FI), thus, FI = (Unlocking Access + Unlocking Usage + Quality) - Risk.

Access to financial services can generate economic activities-Sophisticated use of financial services even presents bigger financial and social possibilities for the included. In Mexico, a research by Bruhn and Love revealed that, there were huge impacts in the economy in Mexico, that is, 7% increase in all income levels (in the local community) when Banco Azteca had rapid openings of branches in over a thousand Grupo Elektra retail stores when compared to other communities that branches were not opened. Also the savings proportion through those households in the local community reduced by 6. 6%, a scenario attributed to the fact that households were able to rely less on savings as a buffer against income fluctuation when formal credit became available.

Here, it must be noted that through savings is encouraged, the reduction in savings by 6. 6% means more funds can rather be channeled for investments into economically viable entities or even services. As the cycle continues, and in sophisticated use of financial solutions along the financial services value chain, they will need to save except for other investments later. Similar or even more positive correlation is observed if the medium of access and usage is through innovative technology.

Using Digital Financial Inclusion Strategies in Humanitarian Services

Despite the use and usefulness of financial services in crises situations, financial exclusion is particularly acute among crisis-affected countries. 75% associated with adults living in countries with humanitarian crises remains outside of the formal financial system and struggle to respond to shocks and emergencies, build up productive assets, and invest in health, education, and business.

Researchers continue to show the growth in acceptance of electronic payments especially through the use of mobile phones. There is growing evidence supporting digital financial inclusion. GSMA in its reports revealed that there were 93 countries between the periods regarding 2006-2016 of with 271 mobile money operating service providers which had registered over 400 million accounts globally. They give some evidence in some countries - which have been receiving humanitarian assistance- where there is growing acceptance of digital financial inclusion through use of a phone.

In Rwanda significant numbers of refugees used phones for mobile money services whiles some do so commercially for service fees. In Uganda, Refugee communities are noted for use involving mobile money service as per the report. This has necessitated MNO Orange Uganda, a telecommunication firm to expand mobile money service to refugee communities by building a communication tower to improve access plus usage of the services. In Pakistan, one of the largest refugee communities- third largest- has the government using mobile money for cash transfers to refugees. The evidence abounds and this calls for humanitarian agencies to rethink and reconsider digital inclusive financial services beyond the current numbers. In Lebanon (The largest refugee community) those on humanitarian assistance uses ATM issued by aid organizations to access their cash transfers.