IFC, Mastercard Foundation Extend Financial Inclusion for Millions in Africa

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IFC, a
member of the World Bank Group, together with the Mastercard Foundation, today
released a new report documenting the transformation underway in financial
inclusion in Sub-Saharan Africa. The findings are based on lessons learned from
joint projects that have resulted in access to new digital financial services
for more than seven million users on the continent over the past six years.
Digital Access: the future of financial inclusion highlights
the phenomenal success of digital financial services in Sub-Saharan Africa and
outlines the challenges still to be tackled to reach universal financial
access. It captures the experience and knowledge gained by IFC and the
Mastercard Foundation in supporting the growth of digital finance in Africa
under the joint Partnership for financial inclusion since 2012. Working
together with 14 microfinance institutions, banks, mobile network operators,
and payments service providers across the continent, the joint initiative has
resulted in 7.2 million new digital financial services users (a 250 percent
increase from the baseline), 45,000 new banking agents, and $300 million in
monthly transactions.
“Financial inclusion is one of
Africa’s great success stories of this decade. Mobile money solutions and agent
banking now offer affordable, instant, and reliable transactions, savings,
credit, and even insurance opportunities in rural villages and urban
neighborhoods where no bank had ever established a branch,” noted IFC’s Chief
Executive Officer Philippe Le Houerou and Mastercard Foundation President and
Chief Executive Officer Reeta Roy in a joint foreword to the new report.
Financial inclusion in
Sub-Saharan Africa has increased dramatically over the past decade, from 24
percent in 2011 to 43 percent in 2017, according to recently released data from
the World Bank Findex survey. Sub-Saharan Africa is the only region
where the share of adults with a mobile money account exceeds 10 percent.
“The Partnership for Financial
Inclusion has been an important actor in helping to drive financial inclusion
in Africa,” said Ruth Dueck-Mbeba, Senior Program Manager at the Mastercard
Foundation. “We’re proud of the work that our partner, IFC, has led over the
past six years. It has enabled millions of people to benefit from access to
financial services. More than that, the knowledge that we’ve gained will lead
to millions more people improving their lives and their communities by being
able to join the formal financial services sector.”
There is an emerging body of
evidence on the impact that digital financial inclusion can have on inclusive
economic growth and development. A study in the report shows that smallholder
cocoa farmers in Côte d’Ivoire who saved regularly were better able to feed
their families than those who did not save, irrespective of the farmers’ annual
income. The same study also revealed that many smallholder cocoa farmers felt
‘socially excluded’ by traditional banks but were generally accepting of agent
banking and digital services.
Mamie Kalonda, Chief Executive
Officer of FINCA in the Democratic Republic of Congo, one of the client
institutions of the Partnership for Financial Inclusion, said, “In the DRC, I
expect digital financial services will grow even faster in the next five years.
Almost all banks are going mobile.” She added, “It is important to reach the
rural areas, because that is where people are poor.”
In the DRC, the use of mobile
money services has increased from zero in 2011 to 16 percent in 2017, helping
to push the overall financial inclusion rate from 3.7 percent to 26 percent in
the same period.
Riadh Naouar, Head of IFC’s
Financial Institutions Group Advisory in Sub-Saharan Africa, said, “Looking
ahead, we can see some interesting trends for the future. While East Africa has
long been the star performer in terms of the evolution of digital financial
services, West Africa is the new growth market. Not only in terms of reach, but
also for innovation.”
“There is a need in the
broader industry across the continent to shift to the next generation of
digital products,” he added. “A broader, more multi-faceted market is asking
for more sophisticated and relevant products beyond person-to-person payments.
There are evident opportunities to develop digital banking, savings and credit
products, as well as the digitization of value chain financing and merchant
payments.”
The report noted some of the
challenges that will have to be addressed to continue progress in financial
inclusion. For instance, to expand financial services to the last mile will
require investments in merchant and agent networks, and innovation along
agricultural value chains. As well, financial service providers will need to
develop and launch products that meet an increasingly nuanced demand from an
even broader variety of users, such as entrepreneurs, merchants, smallholder
farmers, youth and women.
About the Partnership for
Financial Inclusion
The Partnership for Financial
Inclusion is a $37.4 million joint initiative of IFC and the Mastercard
Foundation to expand microfinance and advance digital financial services in
Sub-Saharan Africa. It is also supported by the Bill & Melinda Gates
Foundation and the Development Bank of Austria, OeEB. For more information.
About IFC
IFC, a sister organization of
the World Bank and a member of the World Bank Group, is the largest global
development institution focused on the private sector in emerging markets.
Working with more than 2,000 businesses worldwide, we use our capital,
expertise, and influence to create markets and opportunities in the toughest
areas of the world. In FY17, we delivered a record $19.3 billion in long-term
financing for developing countries, leveraging the power of the private sector
to help end poverty and boost shared prosperity.
About the Mastercard Foundation
The Mastercard Foundation
seeks a world where everyone has the opportunity to learn and prosper. The
Foundation’s work is guided by its mission to advance learning and promote
financial inclusion for people living in poverty. One of the largest
foundations in the world, it works almost exclusively in Africa. It was created
in 2006 by Mastercard International and operates independently under the
governance of its own Board of Directors. The Foundation is based in Toronto,
Canada.