By Murray Gardiner
The
statistics that hover uncertainty around Africa are not ones that should make
the continent proud. The World Bank has estimated that Africa could potentially
hold ninety
per cent of the global poor population
by 2030 and has recently cut its
economic growth predictions to between -2.1% and -5.1% in 2020 from
the 2.4% of 2019.
The situation has been significantly worsened by the Covid-19 pandemic, as the
continent hits its first recession in twenty five years. But this is not the
picture that defines a continent that has long defied expectation and
prediction. In fact, a young population, a growing consumption market and the
rapid movement towards mobile inclusion and connectivity are shifting the
conversation. Africa is poised on the cusp of change introduced by mobile and
internet technology.
The continent has undergone a remarkable
journey over the past thirty years. It has not only leapfrogged legacy
technology and systems into a more relevant future, but it has done so in spite
of challenging circumstances. This is particularly relevant when it comes to
mobile – the technology, the connectivity, and the financial inclusion. To
date, according to the GSMA 2019 Mobile Money
Report, there are more than one billion mobile money accounts in
Africa that account for 57% of mobile money transaction values. Over the next
five years also according to the GSMA,
it’s expected that 84% of Africans will have access to a SIM connection and
that mobile payments will play a critical role in empowering individuals,
businesses and the economy as a whole.
This is the principle that is dominating the current approach taken by the World Bank in an effort to provide Africa with
much needed support in the wake of Covid-19. The organisation is focusing on
putting women at the centre of digital payment programmes and leveraging
digital technologies to improve trade, government and resource management. This
underpins the organisation’s focus on national payment
systems that are secure, affordable and accessible as these are the
tenets that underpin an economy that is focused on financial inclusion and stability.
African payment solutions are critical in minimising fraud while improving the free flow
of funds to boost business and economic activity. Payment technology that
allows individuals from all walks of life to manage their money securely is the
equivalent of putting a bank into every person’s pocket. Digital payments equalise
engagements while improving transparency and control over finances and
business. They also empower the small to medium enterprises (SMEs), giving them
greater scope for inclusion and access to customers and markets.
This has become particularly true in the current environment. Digital payments
are now, more than ever, the key to unlocking business growth on the continent.
The rigorous regulations put in place by African countries to minimise the
impact of the virus have led to innovative approaches to shopping and living.
Digital payment platforms are significantly safer than cash and are
increasingly being leveraged by governments and organisations to improve
customer access to resources and services.
According to a study released by McKinsey and Company
in June 2020: ‘ Innovation in
payments should be one component of the industry’s response to the
crisis.’ This should include promoting
awareness of digital payments, partnering with other industries and introducing
new and relevant products.
In Africa, digital payments are more than just keys to opening the doorways of
financial inclusion. They are increasingly becoming the steps that will take
the continent out of recession and into a more dynamic and inventive future.
This view is echoed by the investments made by the World Bank and organisations
such as SWIFT and Bluecode Africa; programmes such as the African Continental
Free Trade Area (AfCFTA), and the International Monetary Fund (IMF).
Investments that include cross-border payment platforms increased commerce
capacity, cost management, digital innovation and the empowerment of
individual, micro-enterprise and SME. It’s time to educate businesses and
individuals as to the costs and risks of cash as opposed to digital. There is
need also to showcase the value of digital payments in not just opening up new
markets and opportunities, but in providing tighter cash flow control at a
better price point than cash.
The continent may not be showered in stunning statistics, few continents are at
this point in time, but it is hovering on the edge of a future that has the
potential to transform poverty, business and economy.
