Digital financial services have the potential to revolutionise the way informal sectors in an economy transact by providing solutions for informal traders and entrepreneurs who are largely unbanked and fail to access traditional financial services because these remain inflexible and prohibitive.
‘While digital financial services can be offered in many forms including ATMs, point of sale terminals, and cards (pre-loaded or debit), one ICT platform that is promising particularly for the informal sector is via mobile phones. Mobile Money platforms like Ecocash and Mpesa are far more accessible than traditional bank accounts from the registration of the account to ease of use. Unlike traditional bank accounts, mobile money accounts can be opening simply by producing your national identification documents without need of a large amount to be deposited as an opening balance.
Accessing your funds on the platform can also be done just about anywhere and outside traditional business hours unlike banks which create an added advantage.
Governments also has a critical role to play in making financial inclusion a reality in their country by creating an enabling regulatory environment, establishing an appropriate financial consumer protection framework, supporting and initiating infrastructure development and catalyzing a digital ecosystem.
The links between financial inclusion—particularly for young people—and broader development goals is increasingly being recognized on the continent and globally. “The Sustainable Development Goals feature financial inclusion as a key enabler to multiple goals. The links between financial inclusion, digitization and sustainable development in Africa is apparent. Digital financial services offer the promise of developing the continent through the largely unbanked informal sector consisting primarily of young people and women. Deliberate efforts on the part of governments and providers can help put the tools in the hands of youth and women in the informal sector empowering this group of informal traders and entrepreneurs to use them.
This article is sponsored by SNV Zimbabwe for the Stimulus Africa Entrepreneurship Symposium 2016: ICT for Development – 31st March – 1st April at The Stimulus Innovation Centre, 171 Fife Avenue, Harare, Zimbabwe.