ADFI to give grants to entities with digital financial inclusion facilities

The Africa Digital Financial Inclusion Facility (ADFI), a new innovative financing vehicle designed to accelerate digital access to financial services has announced its call for proposals to enable it dish out grants and loans to entities leveraging technology to deepen financial inclusion.

Setup by African Development Bank (AfDB) in partnership with the Bill and Melinda Gates Foundation (BMGF), Agence Française de Développement (AfD) and the Government of Luxembourg (the Initial Donors), ADFI was launched in June 2019, at the AfDB’s annual meetings in Malabo, Equatorial Guinea, and comprises a multi-donor trust fund and debt funding from AfDB with a projected ten-year (10) investment horizon.

“Through catalytic and strategic investments in digital financial services (DFS) throughout Africa, ADFI will seek to break down barriers to DFS growth and uptake in order to accelerate financial inclusion in general and reduce the gender gap in financial inclusion in particular,” AfDB said.

The design for ADFI was informed by a comprehensive continental study which established that catalytic digital financial inclusion interventions will have the potential to impact a total addressable market (TAM) of 332 million financially excluded adults on the continent, 60 percent of whom would be women.

In keeping with its intent to be catalytic, ADFI will strive to play an additive role to the financial inclusion ecosystem on the continent and will, through investments, give prominence to projects that have the potential to generate maximum impact.

According to the AfDB, one of the criteria for the grants and loan is that projects to be funded must demonstrate a positive impact (direct or indirect) on the livelihood of stakeholders, particularly those at the bottom of the pyramid, namely women as well as vulnerable communities and population groups.

Therefore, proposed grants and loans from the ADFI trust fund must be projected to significantly further at least one of the following objectives, with preference given to projects that further several of them; by 2025, 80 percent of the adult population in Africa are financially included and served by a network aligned with Level One Project (L1P) principles, 100 percent of the total addressable market (TAM) of financially excluded adults on the African continent are within reach and financially included as a result, and Gender gap in financial inclusion is closed.

Expecting to stop accepting proposals after 15th September 2019, the targeted areas where ADFI intervention will channel it resources include both the private and public sector and aligned to the following four pillars: infrastructure, policy and regulation, products & innovation, and capacity-building.

According to the AfDB, grants and loans may be extended to the following entities: Financial institutions (bank and non-bank), remittance and payment service providers, payment aggregators, mobile network operators, e-money issuers, FinTechs, regulatory bodies (including central banks, telecommunication regulators, consumer protection and competition authorities), government ministries, regional and sub-regional economic entities.

Financial inclusion data: 2017 Global Findex by the World Bank analysed by BusinessDay revealed that mobile money drove financial inclusion in Sub-Saharan Africa.

From 2014 to 2017, the share of adults with a financial institution account remained flat, but the share with a mobile money account almost doubled, to 21 percent, as compiled from the report.

“The region is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe,” the World Bank said adding that opportunities abound to increase account ownership.

The African Development Bank has therefore invited; companies, joint ventures, consortiums of companies, public & private-sector institutions and associations to share concepts across the four primary pillars of intervention highlighted above that will leverage digital financial services to increase overall financial inclusion and reduce the gender gap.