A recent report produced by the Bill and Melinda Gates Foundation, in partnership with the French G-7 presidency, has recommended interoperability, digital identification, regulation, planning, and gender-specific research as the five-pillars in advancing financial inclusion in Sub-Saharan Africa.
According to the report with the title; Women’s Digital Financial Inclusion in Africa, between 2014 and 2017, the share of sub-Saharan African adults with a mobile money account nearly doubled (from 12 percent to 21 percent), and a growing number of people used these accounts to pay bills, move money, and buy goods.
Sub-Saharan Africa is home to the 10 economies worldwide where more adults now have mobile money accounts than have accounts at a financial institution. However, even those who can access digital finance often find that the system is not as valuable, reliable, or affordable as it could be because individuals can only send and receive money with users of the same service.
Hence the report recommended the development of inclusive, interoperable payment systems to accelerate inclusion rate. This is as a result of the fact that most digital finance systems in Africa do not allow customers to transact with anyone they choose; the vast majority of digital transactions are still peer-to-peer money transfers within the same network.
“Another critical barrier to financial inclusion and the use of available financial accounts is an inability to prove one’s identity. Donors and national governments have an opportunity to address both barriers by building integrated systems that combine payments interoperability with a biometric ID database, enabling previously excluded women to easily transact with one another and verify who is on the other side of a given transaction,” Melinda Gates, Co-Chair and Trustee, Bill & Melinda Gates Foundation said.
A person’s ability to prove their identity is fundamental to participating in modern life. A formal ID is often a prerequisite to accessing healthcare, receiving government services, gaining formal employment, voting, and opening a bank account. However, many low- and middle-income countries do not have ID systems with the capacity to provide secure and trustworthy ID credentials to the entire population, nor the necessary legal and technical safeguards to prevent the misuse of data or other privacy breaches.
As a result, nearly 38 percent of the population in low-income countries lack a foundational or national ID.
According to the report, even though digital financial technologies hold potential to accelerate women’s economic empowerment, they also pose considerable risks- from over indebtedness to digitally-enabled fraud. It is thus critical that financial regulations keep pace with technology innovations.
“The G7 can help by supporting efforts like the United Nations Capital Development Fund (UNCDF) Africa Policy Accelerator, and the Alliance for Financial Inclusion (AFI), which assist African regulators in their efforts to design regulatory frameworks that harness emerging payment and ID technologies and advance women’s financial inclusion, while mitigating the downside risks associated with these new technologies,” the report suggested.
According to the World Bank data, 51 percent of male adult in Nigeria had a bank account in 2017 compared to the 27 percent recorded for female; this brings the gap between the male and female to 24 percentage points.
This gap is wider than the 20 percentage points gap that was recorded in 2014 when the total male population with bank account stood at 54 percent with female at 34 percent
Inequitable or regressive legislation can be an underlying cause of women’s economic or financial exclusion. For example, laws that require a husband’s permission for activities, such as getting an ID card, registering a birth, or obtaining a loan, act as major barriers to economic empowerment.
These laws directly hinder a woman’s ability to access financial services, find employment, or even own a cellphone. In 17 countries, married women cannot legally travel outside the home in the same way as men; this restricts women’s ability to find and attend work, access banking or other social services, or live in a place that offers economic opportunities for them. Legal restrictions on driving can have similar impacts
Also, the explained that the assessment of Digital financial inclusion efforts should not be conducted in isolation instead, they should be anchored within a country’s broader digital strategy, including national efforts to expand the electricity grid or increase broadband coverage, as compiled from the report.
“As a first step, countries should carry out assessments of their digital readiness through research into the state of their digital networks and the actions needed to address digital infrastructure gaps,” Gates said.
Nigeria has an exclusion rate of 36.8 percent but the Central Bank of Nigeria (CBN) has a set target to ensure it reduce that number to 20 percent by the year 2020.
Despite the several barriers to financial inclusion in Africa’s most populous nation, the apex has said it is poised to ensure it include 80 percent of Nigerian adult population by 2020. To drive home that course, the apex introduced various financial inclusion schemes.
On October 23, 2012, the central bank of Nigeria in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from about 53 percent in 2008 to 20 percent in 2020.
Less than a year to the deadline, the apex bank has 16.8 exclusion gap to bridge to achieve the set target.
According to Godwin Emefiele, the governor of Nigeria’s central bank, over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intend to broaden access to financial services to individuals in underserved parts of the country.
