There is a growing appreciation of financial inclusion and its role in economic development.
Tied closely to this is the role of mobile money and its contribution to promoting financial inclusion and development.
According to Clayton Hayward, CEO and co-founder of Ukheshe, a SMME digital banking platform provider, South Africa remains highly regulated with licensed banks being the only institutions that can offer e-money services.
This creates a major hurdle, limiting roll-out not only locally, but also in West Africa.
In a 2019 report, GSMA said that globally registered mobile-money services rose from just one in 2001 to 290 in 2019 and that total registered users globally topped the 1-billion mark in 2019.
Of the transaction value totaling R469 million, Southern Africa accounts for only 2% and in 2020, GSMA says that there are still 800 million people in the region that remain disconnected to mobile internet.
“Closing the digital divide has never been more important. It is vital for the longevity of an economy that has been placed under tremendous strain due to the Covid-19 pandemic. Africa needs technology and mobile money innovations to help bridge this gap and connect the disconnected,” says Hayward.
Financial inclusion is not a silver bullet according to Hayward. He says that internet access and mobile wallets will not magically create a sustainable economy: “It is up to industry and government to stimulate small business development, which can then be supported by digital money propositions.”
Hayward believes that Covid-19 will ultimately result in a long term shift to contactless and digital payment solutions making the digital divide a significant issue: “Over the past year, we have seen immense growth in the uptake of cashless systems and we anticipate that the trend will continue, if not gain more momentum.
“But that said, there remains no doubt that the market needs to address the divide with a greater sense of urgency if the economies are to survive and then thrive.”