These people do not hold a bank account and transact with cash or informal financial services only, excluding them from actively participating in the economy.
The issue of financial inclusion highlighted the critical need and room for growth in South Africa towards creating an inclusive digital economy in Africa. This would entail increased access to financial technology (fintech) and the use of mobile or the internet to conduct financial transactions.
David Lubinski, Senior Programme Officer of the Bill and Melinda Gates Foundation, said that despite South Africa leap-frogging in mobile, the country has been slow in innovating payments.
“A successful digital economy for this continent has to be based on a successful inclusive digital economy in South Africa. If South Africa is not at the front, then we are not succeeding in the inclusive digital economy for this continent.”
Speaking on financial inclusion from a digital perspective in emerging economies, Vice-president of Business Integration at Mastercard, Gabriel Swanepoel, said retail in Africa is particularly affected by the lack of payment solutions.
“95% of retail transactions in Africa and the Middle East are still executed using cash, locking merchants and consumers into unnecessary risks and high transaction costs.”
The South African Reserve Bank (SARB) is exploring infrastructure and regulatory interventions to accelerate the country’s payment journey.
“We should bring our heads together to say as a continent what practical measures that we can adopt to liberate mobile if it will enable inclusion,” said Tim Masela, who heads up the National Payments Systems Department at the South African Reserve Bank (SARB).
Masela emphasised the need for increased collaboration between regulators and service providers to achieve the industry’s goals.
“You should regulate for what you do, not what you are,” he added.
The bi-annual conference, hosted by the Payments Association of South Africa (PASA), brings the payments industry together to unpack the latest developments, applications and technologies.