Financial Inclusion: How To Get There
Africa is far behind in terms of provision of financial services for its bulging population, and it needs to urgently deliver a robust financial infrastructure that enables prosperity for the people. For almost a decade, the global community and national governments have made concerted efforts to expand financial inclusion—creating a financial system that wors for all and opens the doors to greater stability and equitable progress. The progress towards financial inclusion in East Africa is evident. In Kenya and Tanzania, it is easier than ever to access financial services with only a mobile phone. But it is far different in West Africa, where the slower pace of development of mobile money has meant limited financial inclusion for some of the poorest communities on the continent. Although the root cause of this predicament is multifaceted, new thinking and innovation in financial services, which includes the provision of appropriate financing instruments targeted at this group of the population, has become critical these past years. It is clear that the main impediments to financial inclusion in Africa are the high cost of opening and maintaining formal bank accounts, the long distances to bank branches and the daunting list of personal information that banks require to support applications to open an account. Sometimes, the erratic nature of Central Bank financial policies and regulations also discourages people from engaging with formal financial institutions. These constraints have stimulated a high level of demand for alternatives to the traditional banking and financing system. Mobile Phones to the Rescue While mobile phones are quickly becoming more affordable, digital financial solutions that are tailored to very poor and remote communities are urgently...