Digitalisation is key to
inclusion
Within the scope of accelerated digital transformation, the report also notes that continued digitalisation in the Middle East and Africa (MEA) is key to advancing financial inclusion. This is especially relevant in regions such as East Africa, where IMF research found that, even where financial inclusion through traditional banking services was declining, expanded access to digital tools and services increased financial inclusion. This trend is set to continue in 2021, especially in the more digitally advanced economies such as Ghana, Kenya and Uganda.
According to Economy 2021, the need to bring the population into the digital economy first through online banking solutions is paramount to delivering growth over generations to come. Fintech disruption in online banking is set to be a key driver for this. The Mastercard ecommerce study also noted more than three quarters (76%) of South African respondents learned to bank online, reiterating the sentiment that it’s just not shopping, but all aspects of life that are moving online. Brick-and-mortar business creation is expected to decline further in 2021 in favour of online business creation and the adoption of initiatives that connect a merchant’s sales data with access to capital.
“We recognise the overwhelming
pressure that small business owners are currently facing and are committed to
supporting them through Covid-19 and beyond as they adapt to a new way of
operating and evolved customer needs,” says Suzanne Morel, country manager of Mastercard South Africa.
“This is why we have collaborated with Standard Bank, and Google to help
small business owners move their operations online, accept digital payments and
attract more customers.”
Another aspect of advancing financial
inclusion highlighted by Economy 2021 is leveraging cutting-edge
technologies to connect consumers to small businesses and micro-merchants. As
digital innovation improves and internet access increases, digital payment
solutions such as Contactless, Virtual Card Numbers and Quick Response codes
offer more possibilities than ever before.
Mastercard says it has been working to bridge the financial inclusion gap through a broad range of efforts, including partnerships with mobile network operators, ongoing work on government disbursement solutions, wage digitization of private-sector workers, solutions for gig workers, scaling efforts with telcos via their digital platforms and digital wallets.
The youth challenge
A key success factor for regional economies when it comes leveraging the growth of ecommerce and advancing financial inclusion is the young and fast-growing populations across MEA. Africa is home to 19 of the world’s 20 youngest countries. As millions of young consumers become mobile users for the first time, GSMA anticipates Sub-Saharan Africa to cross a 50% penetration rate of unique mobile subscribers by 2025.
In addition to the advantages that this demographic presents, Economy 2021 also sets out the associated risks such as growing youth unemployment. The report notes that the link between high unemployment, high youth unemployment and social unrest is likely to remain an issue in 2021, as is the potential fallout from climate change – which carries both short and long-term risks.
“This growth of the digital economy represents a ‘coming of age’ for e-commerce, a turning point in bridging the digital divide. We are heading for a multi-speed global recovery that favours low-touch over high-touch,” says David Mann, chief economist for Asia and MEA at Mastercard. “Small businesses and micro-merchants are especially crucial to the region’s economies and by enabling them to accept digital payments, we can connect more people and communities to financial freedom and eventual prosperity.”
Mastercard
has committed to powering small businesses through its payments
technologies, network and insights, as part of a global $250-million pledge in
products and services over the next five years.
Alongside ecommerce, the report anticipates automation
around the Fourth Industrial Revolution (4IR), contactless interaction, local
delivery services and ‘tele-everything’ to be other long-lasting trends. Among
the trends expected to reverse as mobility restrictions are gradually lifted
are eating out and leisure travel, a key GDP contributor in many MEA economies.
Traditional tourism-focused economies, such as Mauritius, Kenya and Egypt, will
benefit from international tourism’s eventual return.
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