[ad_1]
In 2021, as Nigeria failed to meet its financial inclusion target of 80 percent, Kenya was recording a significant milestone in that direction.
Patrick Njoroge, Governor of the Central Bank of Kenya, on Tuesday 6 April 2022, at the opening of the Visa Innovation Studio in Nairobi said the number of people that are financially included or banked grew to 83.7 percent by the end of 2021 from 26 percent in 2006. The Innovation Studio is the first by Visa in the sub-Saharan African region.
Going by the total population of 48 million, it will mean that there are now 40.17 million Kenyans with access to financial inclusion, which represents about 7 in 10 Kenyan citizens.
The FinAccess (Financial Access) Household Survey 2021, released by the Central Bank of Kenya and the National Bureau of Statistics in December, however, looked at the total adult population which is currently at over 30.3 million according to the World Population Review. At 83.7 percent financial inclusion, it means that over 25.3 million adult Kenyans are banked and that is about 7 in 10 adult Kenyans. The study shows that 11.6 percent of the adult population is excluded while 4.7 percent use informal financial services as of 2021.
Nigeria on the other hand is seeing slow growth in financial inclusion. According to data from Enhancing Financial Innovation and Access (EFInA), 38.1 million of Nigeria’s 106 million (18 years and above) adults or 36 percent of Nigerians remain completely financially excluded. The Central Bank of Nigeria set a target of 95 percent financial inclusion by 2024.
Nigeria’s financial inclusion rate grew to 64.1 percent in 2020 from 63.2 percent in 2018. This means that the financial exclusion rate dropped marginally from 36.8 percent in 2018 to 35.9 percent in 2020. However, the excluded adult population of 38.1 million reported in 2020 was higher than the 36.6 million recorded in 2018, meaning 1.5 million adults fell into the exclusion circle in the last two years to 2020.
Read also: What we learnt from 2021 mobile money report
Kenya’s growth was largely driven by new financial technology and innovations, especially in mobile money and mobile banking. In September 2021, the Governor had said that 96 percent of transactions happen outside the bank branches representing a 91 percent increase before the COVID-19 pandemic struck.
Kenya’s internet penetration at 42.0 percent is higher than Nigeria’s at 40.91 as of February 2022. Eastern Africa’s internet is also ranked among the strongest on the continent. According to the Internet Society’s Pulse Platform, Kenya ranks high in infrastructure which is essential for connecting underserved communities and encouraging growth and innovation.
Njoroge said Kenya’s dominance in digital financial innovation in Africa is due to the commitment to the vision for the payment system. The vision is to have a secure, fast, efficient payment system that supports financial inclusion and benefits all Kenyans.
The people-centric approach to financial technology is what underlines innovations like M-Pesa which dominates the mobile money market in Kenya. There are over 30 million people using the service across 9 countries where it is present. But a significant majority of those consumers are Kenyans. M-Pesa also processes 61 million transactions per day.
“Our success is in what we do in leveraging and opening up partnerships,” said Sitoyo Lopokoiyit, managing director of M-Pesa Africa who was a panelist at the Visa Innovation Studio launch.
M-Pesa now has an open Application Programming Interface (API) which houses over 42,000 developers working on different solutions. Lopokoiyit says this has to do with the perception of M-Pesa as beyond a product but a brand or an ecosystem helping companies solve real problems.
Visa’s Innovation Studio in Kenya is the second one by the payment giant in Central Europe, the Middle East, and Africa region. The Studio plans to broaden collaboration in the payment market in Kenya by bringing together the entire community of creators, innovators, tech entrepreneurs, investors, policymakers, etc to create solutions that will tackle the many pinpoints that consumers face in the financial services sector in Africa.
Aida Diarra, senior vice-president, and group country manager at Visa, Sub-Saharan Africa region, says the journey to financial inclusion in Africa is a marathon.
Despite the growth of digital banking and the rise of fintech companies, cash still accounts for 90 percent of total transactions on the continent. There is also apathy from merchants who have trust issues with digital payment and would prefer cash transactions. Diarra says some of these small businesses do not even have the digital tools to carry out digital transactions.
While cash is not expected to completely go out of existence, Diarra says collaboration within the payment ecosystem can push out innovations that are capable of attracting these unbanked businesses and individuals in Africa. The collaboration will also require the force of forward-looking policies.
Policies cannot be seen to be creating barriers to innovation, says Otto Williams, Senior Vice President, Head of Partnerships, Innovation, and Digital Solutions for Visa Central and Eastern Europe, Middle East, and Africa. Barriers need to be removed in order for more young talented people to come into the payment space.
“The youths (in Africa) are very motivated to address the challenges that they face, to problem-solve, adopt technology, to build new things, and we have to enable them. Part of the enabling is removing barriers to the things that they need to be successful,” Williams said.
[ad_2]
Source link