Deputy CEO of AfricanNenda Foundation, Sabine Mensah is confident that Africa will achieve universal access to financial inclusion by 2030, given the speed at which countries are rolling out and upgrading instant payment systems (IPSs) on the continent.
Speaking to journalists on the side lines of the launch of the State of Inclusive Instant Payments Systems (SIIPS) in Africa Report, Sabine Mensah said, per the numbers, Africa is now leading the world when it comes to instant payments, and “I am confident that by 2030 we will achieve universal access to financial inclusion across the continent.”
Per the SIIPS Report, put together by the AfricaNenda Foundation in conjunctions with the World Bank and the United Nations Economic Commission for Africa (UNECA), the year 2023 saw 31 IPSs in Africa recording US$1 trillion in 49 billion instant payment transactions.
The value of transactions for 2023 represents a 273% growth since 2020, while the volume of transaction represents 47% growth over that of the previous. The trajectory over the last five years indicates a 39% average annual growth in value and 37% growth in volumes.
Again, beside the 31 IPSs that are live on the continent and functioning at various levels of inclusivity, there are 27 new ones which are currently being built, out of which seven are expected to go live within the next 18 months.
“So clearly the trajectory shows that all countries in Africa will have instant payment systems running before 2030 and this will impact financial inclusion and accelerate our goal of universal access to financial inclusion if all of these systems are inclusive. There is progress towards inclusivity with at least nine IPSs being at the progressed level of inclusivity,” Sabine Mensah stated.
Yawning Exclusion Gap
In spite of the impressive progress made so far, there are still some 400 million plus adults in Africa who still lack access to financial inclusion, and that constitutes 40% of Africa’s adult population. Of that number, 60% are women.
Sabine Mensah said AfricaNenda carried out a consumer research in some countries to find out why that yawning gap, and the results threw up three key concerns which constitute barriers to financial inclusion for a lot of Africans.
The concerns were about cost of digital finance compared to cost of cash usage, rampant digital fraud, and lastly abuse of data privacy. Many Africans find it cheaper to us cash than digital finance due to taxes and fees. In Ghana, for instance, apart from the service fees, government has also introduced a transfer tax, which has impacted negatively on the use of digital finance, to the extent that even the two leading presidential candidates in the upcoming elections have both promised to scrap that tax if voted into power.
Sabine Mensah noted that apart from Ghana, other Africa countries also introduced taxes on mobile money transfers and that impacted adversely on the use of digital finance. She said if African states want to drive the use of digital finance, the policy should rather be to give incentives to the users and not burden them with additional cost.
Per the report, consumers were also worried about the high incidents of fraud on digital finance platforms and the lack of commitment on the part of stakeholders to protect consumers when such incidents happen. Lastly, the abuse of consumer data without their express consent is of concern to them.
Sabine Mensah said, beyond putting out the SIIPS Report over the last three years, AfricaNenda has also been engaging the key stakeholders such as policymakers, regulators and service providers on strategies to address consumer concerns at both the infrastructure and regulatory levels to ensure rapid march toward the 2030 universal financial inclusion target.
For instance, she stated that there is a critical need for strong consumer recourse mechanisms that address consumer complaints in a transparent and efficient manner; and that must be at the infrastructure, service provider and regulatory levels, to ensure trust in digital payment systems.
According to her, so far, the engagements have been positive and all the stakeholders are showing immense commitment toward addressing the barriers, which gives AfricaNenda the confidence that over the next few years, several instant payment systems in Africa will reach maturity level with high level of safety, protection, affordability and several use cases that will make them preferrable to the use of cash.
“I am hopeful that as we share the data in the report with policymakers and regulators they will move towards providing more enabling environment for digital payments to emerge in Africa and continue to be the lifeline of financial inclusion for millions of people in Africa,” she said.
Transparency in Data Sharing
Sabine Mensah also said there is need for regulators and IPS operators on the continent to willingly share their data with AfricaNenda or make it easily accessible, so that subsequent SIIPS reports will be more comprehensive and do a more holistic analysis of “where our strengths and weakness are, how do we share best practices and how do we improve the ecosystem.”
“I therefore count on the media to help us push policymakers, regulators and instant payment operators to share their data with AfricaNenda so that we can highlight the great success stories for others to learn. Currently we have 9 inclusive IPSs on the continent – we need to tell the success stories to help improve the ecosystem and that can only happen when countries share their data,” she said.
